V 



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THE 
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A THESIS PRESENTED TO THE FACULTl 
SCHOOL OF THE Ux^IVERSITY OF PEMS^ 
TIAL FULFILMEIT OF THE REQUIREMENT 
THE DEGfREE OF DOCTOR OF PHIL(5S0PH' 





BY 



PHN CHRISTIE DUNCAN 





Class J2IjlA£3' 
Book .^Xf g 
Copyiight^J^ 



COPYRIGHT DEPOSIT. 



THE ECONOMIC SIDE OF 
WORKS MANAGEMENT 

J3f 



A THESIS PRESENTED TO THE FACULTY OF THE GRADUATE 
SCHOOL OF THE UNIVERSITY OF PEMSYLYANIA IN PAR- 
TIAL FULFILMENT OF THE REQUIREMENTS FOR '^fQ^ 
THE DEGREE OF DOCTOR OF PHILOSOPHY __— ■ 

763 



BY 



JOHN CHRISTIE DUNCAN 



A 



^%% 



Copyright, 1911, by 
D. APPLETON AND COMPANY 



Cci.AJa83089 



PREFACE 



This thesis appeared in 1907 in the Business World 
Tinder the title of The Economic Side of Works Manage- 
ment. The understanding was that reprints would be 
made, bnt, unfortunately, before that could be brought 
about the magazine changed hands, the manuscript was 
lost, and the plates destroyed. 

The writer would have reprinted the articles as they 
appeared in the Business World had it not been for the 
fact that the paper was materially changed for editorial 
purposes without his knowledge or consent, and some of 
the parts were omitted which should have appeared. To 
have reprinted the paper as it appeared in the Business 
World would not have done justice to the thesis nor 
have been a creditable piece of work for a Doctorial 
dissertation. 

In the meantime the writer had started a book on the 
general topic of the Principles of Industrial Management, 
and had used his thesis notes as a basis for the third 
part of the book. The publishers of the book did not 
feel free to let the rewritten thesis appear before the book, 
and as it was impossible to reprint the original thesis, 
the authorities of the University of Pennsylvania very 
generously consented to accept the third part of the book 
in order to fulfill the technical university requirements. 
This reprint contains all the original matter in the first 
thesis, but it is presented in a little better form. 



CHAPTER XIII 

THE THREE TYPES OF ORGANIZATION 

In Parts I and II the questions which the business exec- 
utive must consider have been discussed. The creation of 
an ideal equipment solves about one half of the problem of 
industrial management. The plant must yet be put under a 
satisfactory organization before it can be well managed. The 
works manager must so combine the equipment which has 
been given him with labor and material that the product of 
the plant will be the cheapest and best that can be manu- 
factured. The sales department must put the goods on the 
market efficiently. 

The works manager's field in the concern is limited to 
the production department of business. His work begins 
with the receipt of the order and ends with its shipment. 
He has nothing to do with the soliciting of orders, he is not 
concerned with the finances of the firm nor with its legal diffi- 
culties. His work begins and ends with production. To 
perform his duties ideally: 

1. He must get the work performed rapidly. 

2. He must get the work performed accurately. 

8. He must get the maximum result from the machinery. 

4. He must get the maximum product from the raw ma- 
terial. 

5. He must see that improvements in methods are intro- 
duced. 

In order to get this work performed, there have been 
evolved three kinds of industrial organization — ^the military, 
functional, and departmental types. 

183 



184 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

The Military System of Organization. — This is the old- 
est and was almost the only one until very recent years. 
According to the military scheme, all power and authority 
for directing the work emanate from one man, who is held 
responsible for everything that is done in any part of the 
division under his control. With his plan the leader does 
not give general directions and then look for results. He 
keeps control of all details that arise within his sphere of 
command. The armies of former ages were run according 
to this plan. The general- in-chief gave directions concern- 
ing the health of the men, the way they should march ; he 
saw to the provisioning of the troops, and in fact Csesar, 
Napoleon, Frederick, and many other great military leaders, 
directed the affairs of the state as well. Curiously enough 
the modern army is no longer run according to the old style 
military system. The health of the troops is under the care 
of a distinct body of men, the provisioning and supplying of 
the troops is attended to by another group of officials. The 
commander-in-chief now decides upon the general plan of 
the campaign. He plans where and how battles shall be 
fought, but modern warfare no longer makes it possible for 
him to lead his men as did the youthful Alexander, the 
great Napoleon, or as did Scott, Lee, or Grant in American 
history. The army now has a staff organization which cor- 
responds very closely to the departmental system used in the 
progressive firms of to-day. 

With the military system of industrial organization every 
officer in each division or subdivision is held responsible for 
all that happens within his province. No matter what mis- 
takes are made, he is the one who must stand the conse- 
quences. If a foreman has charge of a shop and that shop 
runs behind in orders, is extravagant in the consumption of 
supplies or power, or is deficient in the quality of work 
turned out, the foreman in charge is responsible. He is 
given a division presumably sufficiently small to make it 



THE THREE TYPES OF ORGANIZATION 185 

possible for a reasonably good man to look after details, and 
everything is considered distinctly within the scope of his 
duties. He is expected to keep his men always supplied 
with work. He must see that the machines are in working 
order. He must be able to select good men and keep them. 
If any question arises concerning how things should be done, 
he should be able to give explicit directions. He must de- 
tect work that is not properly done, know on whom to saddle 
the blame, and must also remedy the faults. In a word, he 
must be a thorough, all-round man to fill his place properly. 
A trained man of ordinary ability can efficiently direct 
from fifty to one hundred and fifty people in simple, ordi- 
nary tasks which require little mechanical ability. It is only 
the exceptional man of considerable experience and famili- 
arity with the work who can profitably direct more than one 
hundred and fifty or two hundred workmen. In continuous 
industries, of both the synthetical and analytical types, a 
large number of processes are simply and easily directed. 
The work is almost entirely routine. The machinery is nearly 
if not quite automatic. There are no great calls upon the 
intelligence of the foreman, because there is very little to be 
done outside of seeing that the workers are at their posts and 
are turning out an adequate amount of material. In such 
industries, the military organization is ideal, because the task 
should be quite within the limits of the foreman's ability, 
and the responsibility can be constantly fixed upon him. If 
he fails to prove equal to his position, there is no great diffi- 
culty in obtaining another man. Generally speaking, the 
executives of these types of industries do not find their labor 
management problems difficult of solution in the production 
departments. Their energies can be directed toward the dis- 
tributive department, and to finding a corps of workers who 
will develop the mechanical efficiency of the machinery, look 
to the economies of the processes and power-saving possibil- 
ities and to other similar questions, 



186 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

In industries which depend to a greater extent upon the 
ingenuity and efforts of the laborer who cannot be so greatly 
aided by machinery, the military organization shows its 
weakness. 

The machine shops in the assembling industries were 
the first to feel the limitations of the military system. For 
many years, no one noticed its deficiencies, because the shops 
were small and one man could attend to all the details and 
give a fair degree of satisfaction. When, however, the de- 
partments grew to more than two hundred workmen, the 
scheme began to break down. No one could look after all 
the details of so large a shop. It was useless to discharge the 
overseers, because no one could be found equal to the task. 
It is a dictum in management that if punishment by dis- 
charge does not eliminate failures and mistakes in an or- 
ganization the scheme in itself is vitally wrong. 

Works managers gradually came to appreciate that the 
defects were due to the system, so they sought to eliminate 
the weaknesses of too highly concentrated authority by divid- 
ing the leadership among several men, each being equally 
responsible to the superintendent. This solved the problem 
of giving the foreman a reasonable number of people to look 
after, but it increased the unproductive labor expenses and 
tended to make a confiict in authority and interests. For 
example, the foreman of the machines in order to make a 
good showing would be apt at times to have his men rush 
the work through in a hasty manner, expecting the erecting 
gang or bench hands to make good his deficiencies. The 
bench foreman would also slight his work. If heavy castings 
were to be moved by the cranes, two foremen, equal in au- 
thority, would put the riggers and crane men in an exceed- 
ingly unpleasant situation because both would insist upon 
immediate attention. There was but one outcome. The rig- 
gers served whomsoever they pleased. The writer is familiar 
with a shop where the riggers were bribed by an ambitious 



THE THREE TYPES OF ORGANIZATION 187 

gang boss to attend to his requests. He needed the services 
of the crane for a considerable length of time. However, 
there were intervening periods of a half hour or so in which 
the crane could be used to fill machines and move other cast- 
ings. Instead of using this time and making the favored 
man wait an occasional quarter or half hour, the riggers stood 
by the job, holding up the machines and erectors the better 
part of the day. Of course this is an exceptional and most 
glaring example of the weakness of this scheme, but it is 
nevertheless a weakness which grows out of too extended a 
spreading of the military system. 

Briefly summarized, the advantages of the military system 
of management are : 

1. It unifies the work, putting it all in the hands of one 
individual. 

2. It fixes the responsibility for the performance of tasks 
in a definite manner upon certain individuals. 

Its disadvantages are: 

1. When a plant becomes too large the foremen are held 
responsible for too many things, and cannot justly be held 
accountable for blunders or for smallness of productivity in 
machines and men. 

2. The foremen have so much to do that they cannot see to 
the introduction of improvements as rapidly as is desirable. 

The military system of works organization in a large con- 
cern leads to chaos in management, because it fails to pre- 
vent bad work and to stop the nursing of jobs. It has no 
means of rewarding the efficient man or of punishing the poor 
worker or loafer. Managers of plants who worked with the" 
military system in their younger days were puzzled as to why 
the later generation developed so few good foremen and why 
it brought forth so many poor workmen. They did not rec- 
ognize the fact that it was due not to a degeneration in the 
younger members of the community but to an inherent fault 
in the system. Thoughtful students felt the need of some- 



188 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

thing, but hardly knew what. Some plants tried varying 
schemes of running their work. Several concerns hit upon 
the plan of piece wage payment and careful inspection of 
material by independent inspectors who were held responsi- 
ble. This scheme has worked with a reasonable degree of 
success, but there are so many ways of fooling the inspector 
and of getting bad work passed, and there are so many possi- 
ble evasions of the piece wage scheme that it was soon re- 
alized that another change was necessary before this method 
would prove efficient. The piece wage payment and inspec- 
tion scheme did lead to something better. 

Piece workers, on account of the fact that they are working 
for themselves, are insistent upon allowances being made for 
all kinds of contingencies. The manufacturer finds it more 
profitable to lighten their duties, and to limit as little as 
possible the movement of the workers. He soon begins to 
study how the work can be divided and men assigned to cer- 
tain parts. From this development arose the functional sys- 
tem of organization. 

The Functional System. — The greatest exponent in Amer- 
ica of the functional system of organization is Mr. Frederic 
W. Taylor, a past president of the American Society of 
Mechanical Engineers. Mr. Taylor has held a great number 
of responsible positions in various sections of the country, 
and has made an enviable reputation in the engineering 
world. His paper entitled ' ' Shop Management, ' ' delivered 
before the Society of Mechanical Engineers, is a memorable 
contribution. In that paper he discussed the management 
of a shop under the functional system of organization. 

' 'Functional organization consists in so dividing the work 
of management that each man from the assistant superinten- 
dent down shall have as few functions as possible to perform. ' '^ 

1 Cf . Transactions American Society of Mechanical Engineers^ 
Vol. XXIV, Paper No. 1003, p. 1391, 



, THE THREE TYPES OF ORGANIZATION 189 

The scheme is based upon the theory of the division of labor 
as applied to management. A workman in a machine shop 
according to this plan is not under one but several foremen. 
Mr. Taylor advocates four shop bosses : gang boss, speed boss, 
inspector, and repair boss. The gang boss has charge of pre- 
paring the work up to the time that the piece is set in the 
machine. He must show his men how to set the work on 
the machine in the quickest possible time and in the best 
possible way. The speed boss has the function of providing 
the proper tools for the workman on the machine. He must 
see that the cuts are started at the right place and that the 
machine is speeded up to its proper limit. The inspector is re- 
sponsible for the quality of the work, and both workmen and 
speed bosses must finish the work to suit him. The repair 
boss sees that each machine is kept in working condition, 
is clean, free from rust and scratches, and is properly oiled. 
In addition to these four shop overseers the workmen 
come into contact with the representatives of the planning 
department, whose function is to relieve the shop foremen of 
all thought of how the work should be arranged and distrib- 
uted to the machines. Four representatives of the planning- 
room also come in contact with the workmen, the order of 
work or route clerk, instruction card man, time and cost 
clerk, and the shop disciplinarian. The route clerk writes a 
daily list, instructing the workmen and all shop bosses as to 
the exact order in which the work is to be done by each class 
of machines or men. The instruction card man states in 
writing the general and detailed drawing to refer to, the piece 
number and cost order number to charge the work to, the 
special jigs to use, the depth of cut to be made, the number 
of cuts to make, and the time in which the job should be fin- 
ished. He also sets the piece rate. The time and cost clerk 
sends to the men through the instruction card all the infor- 
mation they need for recording their time and cost of work;, 
and he secures the proper returns from the men. 



190 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

"In case of insubordination or impudence, repeated failure to 
do their duty, lateness or unexcused absence, the shop disciplinarian 
takes the workman or bosses in hand and applies the proper rem- 
edy, and sees that a complete record of each man's virtues and 
defects is kept. This man should also have much to do with read- 
justing the wages of the workmen. At the very least, he should 
invariably be consulted before any change is made. One of his 
important functions should be that of peacemaker." ^ 

To quote Mr. Taylor again: 

"The greatest good resulting from this change is that it becomes 
possible in a comparatively short time to train bosses who can 
really and fully perform the functions demanded of them, while 
under the old system it took years to train men who were after all 
able to thoroughly perform only a portion of their duties. . . . 
Another great advantage resulting from divided foremanship is 
that it becomes entirely practicable to apply the four leading prin- 
ciples of management to the bosses as well as to the workmen." ^ 

The four leading principles of management to which Mr. 
Taylor refers in this last statement are : 

1. A large daily task should be given to the men. 

2. The men should be given standard conditions, making 
it possible to perform the task. 

8. They should be given a high pay for success. 

4. They should lose in case they fail to reach the require- 
ments of the daily task. ^ 

Viewing the subject from a broader point of view, there 
are other advantages to be gained from the functional organi- 
zation. 

1. The work is divided so that one man need attend to 
only one thing. It enables complete specialization of labor. 

2. It definitely fixes the responsibility for the performance 
of each function upon one man. 

1 Transactions American Society of Mechanical Engineers, Vol. 
XXIV, pp. 1393, 1394. 

2 Ibid., p. 1394. 3 Ibid., p. 1368. 



THE THREE TYPES OF ORGANIZATION 191 

3. It allows the workman opportunity to think out im- 
provements by enabling him to make an intensive study of 
his work. 

Notwithstanding all of these advantages the functional 
system of organization has not proven popular or successful 
in a number of plants where it has been tried. It causes 
men to lose initiative. It has a tendency to shift and divide 
the responsibility in spite of the contrary intention. This 
has been found to be true in several places where the plan 
has been tried. The difficulties that have been encountered 
in carrying the scheme through are : 

1. It requires a great amount of clerical work to fill 
out instruction cards and write out all orders and minute 
instructions necessary for the complete enforcement of the 
scheme. 

2. It is exceedingly hard at times to define clearly to 
whom certain functions belong and on whom the responsi- 
bility rests when things go wrong. For instance, no less than 
eight bosses outside of the shop disciplinarian come into di- 
rect contact with the workmen. Four of these men make out 
instructions, and four others say how they should be carried 
out. It not infrequently happens that the man who makes 
out the instructions is somewhat vague in his directions, in 
the hope that the speed boss or gang boss will make up de- 
ficiencies. If a mistake occurs under these conditions, it 
becomes a difficult matter to determine who is to blame, 
because the instructions man will plead that they were not 
interpreted correctly and the other bosses will assert that 
such interpretations could be made. Sometimes the instruc- 
tion card man will give instructions and the gang bosses 
may see a better method. If they do, the chances are that 
they will want to put their scheme into operation. Hence 
there will be a conflict of authority. If a boss adheres to 
the system and doesn't follow the best method possible under 

the circumstances, the firm is paying for a system of man- 
14 



192 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

agement which is failing in its purpose of getting the goods 
out in the cheapest possible manner. 

8. It is cumbersome and expensive to operate. In every 
shop the jobs must be assigned to men at all kinds of odd 
times during the day. If a workman desires to start on his 
job he must come into contact with at least three of those 
bosses before he can do anything. There are usually several 
men desiring jobs at one time. Under a system where the 
workman is supposed to know how to set up a job and inter- 
pret instructions, he merely needs to find out what lie is sup- 
posed to do, and do it, calling on the boss only when there 
are complications. With this functional scheme he is not 
supposed to act on his own initiative. As a matter of fact, 
so many bosses really hinder the work. They irritate the 
men and are expensive to keep up, because in a large shop 
they must have a number of sets of bosses to carry out the 
scheme as laid down. 

The Departmental System. — In advocating the functional 
system of works organization, Mr. Taylor made a valuable 
contribution in that he brought out the idea of dividing the 
work in such a way that it could be looked after by func- 
tions rather than by complete units. No plan of organiza- 
tion can be successful unless it is workable. The military 
type fails to be workable in large organizations, because it 
is impossible to get men who are capable of filling the lead- 
ing positions. With the functional plan it is possible to 
train a sufficient number of men to carry out the functional 
duties, but it is only under the most exceptional conditions 
that these various functions can be clearly defined and the 
scheme worked without conflict and irritation. If there is a 
remarkable man at the head who can smooth all points and 
be everywhere present whenever a difficulty arises with con- 
flicting ideas and authorities, the system has a chance of 
working; but in this every-day world a highly sensitive or- 
ganization of that character, no matter how perfect on paper, 



THE THREE TYPES OF ORGANIZATION 193 

is bound to be disrupted by the bumps and collisions of 
daily strife. A finely adjusted, compensated astronomical 
chronometer will keep perfect time, provided it is wound up 
at certain stated intervals, and is kept from jars and vibra- 
tions and extremes of temperature, but for ordinary day use 
to carry around in the pocket, a dollar watch may prove 
more satisfactory. Works managers need the dollar-watch 
combination, and they have found it in combining the good 
features of both the military and functional systems of or- 
ganization. Hundreds of plants at the present time use the 
departmental system without being fully aware of what they 
are doing. The departmental system does the following 

things : 

It divides the plant up into a number of clearly defined 
departments, and puts each under the control of a gang boss, 
who is given general directions to work to and is held re- 
sponsible for results and not for servile attention to detailed 
instructions. Thus in a machine shop there is a man to look 
after the large machine tools, such as lathes, planers, and 
milling machines. Another foreman will be appointed to 
look after the erection of the large parts of the engine, 
another will be given a valve-setting gang, and still another 
may be given charge of the tool-room, and another will look 
after the stores. The riggers or crane men will- be under a 
sub-foreman, who will have to keep all the machines supplied 
with work. In addition to these, the repair department will 
be in the hands of one man, a tool-making and grinding de- 
partment in the hands of another, and the stores department 
in the hands of another. All of these men will be under a 
head foreman or superintendent. Each man is held responsi- 
ble for the output of his machines. When a set of drawings 
of an order comes into the shop, the head foreman will ex- 
amine the drawings and call in the various gang bosses. He 
will tell them the things they are to look after. Each man 
clearly understands, from either written or oral instructions, 



194 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

his particular province. It is then his duty to keep his ma- 
chines going and his men employed on their particular tasks. 
The work, when performed and inspected, is passed on to the 
other departmental boss. If the succeeding gang boss finds 
any defects in the work, he must at once report the mistakes, 
or he will be held responsible for all defects uncovered by his 
immediate successor. 

The departmental system divides the work up into small 
departments, each under the absolute control of a man, and 
the departments are so related to each other that no individ- 
f ual workman will have to obey two bosses. The riggers, for 
instance, in the military system served any man upon re- 
quest. In the functional system, the riggers obey a rigging 
boss who is at the beck and call of a half dozen functional 
foremen. In the departmental system, the rigging boss learns 
from the head foreman the conditions of the large castings, 
and about when they are to be moved, and adjusts his gangs 
in such a way that there will be a minimum of waiting 
throughout the entire shop. If the head foreman finds any 
men idle due to the fact that they cannot work because cast- 
ings are not moved, he can at once ascertain whether the boss 
rigger has arranged the movements correctly, or whether 
there is insufficient crane service. Whatever the reason, 
there is one man from whom an explanation can be de- 
manded and readjustments promptly made. If the machines 
are not turning out sufficient work or are giving poor service, 
the departmental boss cannot blame the speed boss or an in- 
struction-card boss. He has the machines to look after. If 
his men are not efficient, he is to blame, because he should 
report and discharge the delinquents. If the machines are 
in bad condition, he is at fault, because it is his duty to re- 
port defects and breaks at once, and insist that they be re- 
paired. A machine boss should never let a machine get into 
general bad repair. The erecting boss is to blame if the 
erecting is progressing slowly or is poorly done. The great 



THE THREE TYPES OF ORGANIZATION 195 

advantage of this departmental system is that the responsi- 
bility can be fixed; it is possible to train men to fill the jobs, 
and it is impossible to have any shifting of responsibility, 
because the men must show results in output, and not prove 
that they have given or followed instructions. 



CHAPTER XIV 

THE LABOR FORCE 

Before the employer can decide how he is going to run 
his labor force he must determine what kind of labor he is 
going to use, because his treatment of employees will be in- 
fluenced to a very great extent by the labor personnel. The 
labor force may be men, women, or children. Adult male 
labor is for the greater majority of the important industries 
the most profitable kind of labor. There are, however, a 
great number of industries wherein women and children may 
be employed with profit, because they work for less wages 
and have their natural aptitudes for the work. The indus- 
tries that can employ women and children are the textiles, 
shoe factories, and other concerns which produce either light 
materials or goods which require deftness in handling. We 
may compare male and female labor in the following way : 

1. Comparison of Male and Female Labor. — Male 
labor is stronger and has greater physical endurance. Men 
alone are able to stand long-continued heavy work, such as 
is required in a shipyard, steel plant, or locomotive shop. 

2. Men are more apt to be permanent employees. The 
home is woman's ultimate sphere. A woman's maximum 
working period in industrial occupation is usually limited to 
the time she leaves the grammar or high schools until she 
reaches the age of thirty. In that time, she may serve an 
apprenticeship to a trade, and become a capable, conscien- 
tious employee. She is, however, apt at any time to marry 
and leave work. Marriage increases a man's value to the 
firm, because he now has new responsibilities to shoulder, 
and is more desirous of giving satisfaction to his employer. 

8. In general, men have more initiative than women. 

196 



THE LABOR FORCE 197 

Man's initiative is not due to superior brains, but is the 
result of greater opportunity. In the city, night schools, 
Young Men's Christian Associations, correspondence schools, 
and public schools offer inducements in the way of courses 
of study which men can pursue during their evening hours. 
These courses of study are designed primarily for men's 
needs in industry. A great number of the evening schools 
inform the employers of the progress their hands are making 
in. the courses, and the employer is consequently apt to give 
such persons greater opportunities. Women in the same lines 
of occupation do not have the same encouragement, they are 
less able physically to work all day in the mill, and then to 
carry on technical studies after working hours. There is a 
lack of incentive to attend these courses, because they do not 
in most cases regard their work as a life's career. Moreover, 
thousands of, women and girls, after they leave their factory 
at the close of the day, have household duties to perform for 
parents or for the male members of the household, who are 
also engaged, perhaps in the same mill or factory. Even if 
they do not engage in those duties, a girl invariably has a 
great deal more to do than a man; she usually makes much 
of her clothing, often trims her hats, repairs her garments, 
and looks after a thousand and one things which a man 
turns over to some one else and pays for having done. All 
these things combine to make man possess more initiative. 
He has more opportunity to learn how to do harder things, 
has a better physique, a greater incentive to make an effort 
to learn, and less of other things to do. 

4. Woman's clothing is a hindrance to her, and she can 
be employed only in places where the machinery is of such 
a nature that her clothing will make employment safe. In 
places where she could otherwise be more serviceable than a 
man, firms take the trouble to design the work-room and 
machinery in such a manner that she can be employed with 
safety. 



198 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

5. Women's hours of labor are more closely restricted by 
law. Our labor laws justly seek to throw more protection, 
around women and children than around men. The manager 
of a plant, however, cannot afford to overlook the fact that 
these are disadvantages when he considers women as prospec- 
tive employees, although it is only a question of time when 
the law will place greater restrictions upon male labor. 
Legislation and common justice require conveniences for 
women in wash-rooms, and a supply of chairs for resting 
during the working period. Their hours of daily and 
weekly labor are shortened, and they may not be permitted 
to work overtime except in rare and carefully guarded in- 
stances. 

6. Men are more disposed to form permanent labor 
unions; and, in this respect men may be more difficult to 
deal with than women as regards wage increases. Women do 
not lack organizing capacity, but they are apt to regard their 
industrial grievances as a temporary inconvenience not worth 
the effort to remedy. 

In the long run, powerful labor unions are better for so- 
ciety than unorganized labor. If the laborers of all indus- 
tries are united in their demands, no hardship is imposed 
upon any manager, because all are on the same basis. If, 
however, one concern is compelled to yield to certain de- 
mands which involve an outlay of money, and its rivals are 
not also put to the same trouble and expense, it is working 
under disadvantageous conditions. 

Although women do not readily organize into permanent 
labor bodies, in some respects they are harder to manage 
than men. Many a successful foreman of men would wreck 
his reputation if he applied his methods to women. Tact is 
required to get good results from the girl in the factory, mill, 
or office. 

7. Women have an aptitude for certain classes of work. 
In hosiery mills, silk spinning establishments, and a great 



THE LABOR FORCE 199 

many operations in textile works which require painstaking 
care and deftness, women are better employees. In pottery 
works her lighter touch and more appreciative sense of beauty 
are valuable assets. 

8. Women work for less money than men. Manufac- 
turers and managers of establishments which employ women, 
agree that in the lines in which they employ the women, they 
do so because the same grade of men would demand a larger 
wage. 

Under these conditions, the manager of the concern must 
study carefully his industry and the parts of his industry to 
see where he can introduce female labor. In lines of work 
where it is a question of deftness of fingers and lightness of 
touch or skill in running small machines, women can be em- 
ployed to advantage. Anyone who has visited the National 
Cash Register works will be impressed with the proportion of 
women and girls employed on drilling machines and ma- 
chinery, which finishes and prepares the small iron and steel 
parts of the register for the assembler's hands. Some electri- 
cal manufacturing companies employ women exclusively in 
a number of their departments. In commercial lines, large 
firms employ several hundred women in their bookkeeping 
departments. In one concern the entire bookkeeping staff is 
composed of women who are under the direction of a man 
head accountant. Whether women or men shall be employed 
depends upon whether the woi;k can be adjusted so as to suit 
the peculiar aptitudes of women. 

Child Labor.— In some classes of industries children 
may be employed. The child can be used in a great number 
of operations in textile plants, glass factories, coal breakers, 
and other establishments. Society pays a high price for 
child labor in decreased vitality and efficiency of its adults, 
and is now restricting the liberty of the manufacturer to use 
children. The child as a laborer has only one advantage to 
the manufacturer, that of being cheap. Against this advan- 



200 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

tage the manager may well weigh the disadvantages of child 
labor. 

1. Their hours of labor are limited by law in most states, 
and in those industries where children are employed they are 
apt to limit the hours of the adults, or to compel the manage- 
ment to make disproportionate equipment for the child, as 
compared with the adult, departments. The adults are de- 
pendent upon the children for their material, and when the 
child department shuts down, the adult department may 
have to discontinue. 

2. Children require more careful overseeing. They are 
more apt to destroy or spoil material than their elders, are 
harder to keep at work, and require a greater degree of atten- 
tion and direction. Unless constantly watched, their little 
minds wander from their tasks. They are full of animal 
spirits, and when not under observation will play pranks, 
which cause production to cease, and even frequently destroy 
goods. 

8. Children are more careless about machinery than are 
adults, and more likely to be injured. They are not safe 
workers in a plant. 

The casualty insurance companies do not as a rule care to 
insure children. Some companies refuse to accept risks upon 
any child under fourteen years of age.^ 

Nearly every firm employs boys of seventeen and under 
for messengers, elevator attendants, and similar workers. 
The only reason' for employing boys for such positions is 
their willingness to accept low wages. In spite of his small 
remuneration, the boy is not cheap when one considers his 
unreliability. Some firms have had so much trouble with 



1 This rule, if not already adopted by almost all casualty com- 
panies, soon will be on account of the general tendency of states 
to raise the minimum working age of children to fourteen years or 
over. 



THE LABOR FORCE 201 

boys in filing rooms, as messengers, and as office assistants 
that they are now employing for such places men who are 
well past middle life and are getting better results. Such 
men ask for more wages, but they are well worth the extra 
pay, for they are much more careful, reliable, and faith- 
ful in fulfilling their duties than the youngsters, and far less 
apt to leave. 

From the broad, social point of view it is a question 
whether boys ought to be engaged in such occupations as 
messengers, elevator attendants, and office assistants. From 
fourteen to eighteen a boy should be preparing for his future 
career; if he cannot attend school or college he should be 
serving an apprenticeship to some trade, or be working at 
something which will enable him to fill a place of usefulness 
in some office, store, bank, or similar place in later years. 
Being an office, elevator, or messenger boy, is not giving him 
this preparation; and he should not be so occupied unless it 
is merely a temporary expedient to obtain a position which 
will give him a chance to develop his faculties for greater 
things. The engaging of men past middle life for such 
places, on the other hand, confers a social benefit, and is 
more satisfactory to the employer, all things being consid- 
ered. Besides making his selections of laborers along the 
lines of sex and age considerations, the manufacturer must 
consider the educational qualifications of his employees. 

Classes of Laborers.— All industries require one or 
more of three classes of laborers as regards mental caliber, 
education, and training. 

I. Unshilled Worlcers.—hi the continuous industry of 
the synthetic type these men are used to a very great degree. 
Large numbers of them are required in steel plants as la- 
borers around blast furnaces, coke ovens, the steel furnaces, 
and other departments. In previous years they were more 
widely used than at the present time. Some years ago they 
were employed in great numbers around paper mills, textile 



202 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

establishments of all kinds, and other plants of a similar 
nature, but this type of laborer is being largely eliminated 
from the steel plant, and he is gradually passing away from 
all plants as a type of worker. Conveying machinery is now 
so extensively used and is so efficient that the unskilled la- 
borer is no longer profitable. In the steel plants, he is still 
needed to some extent to look after coke, slag, and other ma- 
terials, to shovel dirt and to attend to cinders, but his days 
are numbered, not only for steel making and continuous 
industries, but for every other type of industry wherein the 
only qualifications are strength and willingness. 

In the analytical continuous industries, great numbers of 
these laborers are required to perform the unpleasant work of 
unloading raw sugar, of cleaning out apparatus around the 
sugar, oil, gas, and meat-packing establishments. They are 
also necessary as attendants in firing boilers and, before the 
introduction of conveying machinery, were required to carry 
the material from department to department. Conveying 
machinery has eliminated the laborer as a draft animal, but 
machinery has not made it possible to remove him from do- 
ing a number of other unpleasant duties. In time it will, 
and it is distinctly to the management's interest, as well as 
society's, to take him away as soon as possible. 

In the assembling industries, the unskilled worker was 
formerly employed to transport the material from the foundry 
to the machine shop and between departments in the shop. 
He was a necessary adjunct around the shop to pull on the 
ratchet for drilling holes, to sledge, to chip the rough cast- 
ings and set the material up on the machines for the ma- 
chinist to finally adjust, but now the new factory has the 
overhead crane which reaches every part of the shop. A hy- 
draulic lift or chain block can be placed at every machine, 
so the laborer is no longer helpful there. Likewise, the air 
drill, air hammer, riveting machine, and air-chipping ma- 
chine take away his job in chipping, riveting, and sledging. 



THE LABOR FORCE 203 

In a word, this laborer is being eliminated to such a degree 
that he will soon become extinct. 

II. The intermediate grade of laborer whose qualifica- 
tions in addition to regularity and good health must be : 

1. Ability to learn to handle machinery of a more or less 
semi-automatic type without injury to himself. 

2. A willingness to attend closely to such machinery, see- 
ing that it is constantly running properly, and is always 
supplied with material to keep it producing. 

8. Ability to keep the machinery in his charge in good 
running order. 

There are three types of machines : 

(1.) The machine which needs an attendant merely to 
keep it filled. Examples of this type of machine are : 

(a) The endless screw-conveying device, which mixes the 
various grades of raw sugar and molasses so that they become 
semi-liquid, capable of being pumped from a tank to the top 
of the building, from whence they are started on their refin- 
ing process. 

(b) Shears, punches, and other cutting devices used 
around iron works, shipyards, and such establishments to 
cut up scrap iron, plates, punch rivet holes, etc. 

(c) The filter presses in oil works, potteries, and plants 
which have straining or filtering processes. 

(d) A great many automatic screw-making machines and 
nail cutters. These machines merely need a rod shoved in 
at one end from time to time, or a roll of steel wire occasion- 
ally started going through the apparatus. Everything else is 
done completely by machinery. 

(2. ) The machine that does most of the work but requires 
an attendant to be present to make occasional adjustments 
and to see that the machine is running in such a way that 
the material going through is not being spoiled. Examples : 

(a) The modern turret lathe, wherein the attendant neer" 
only put the bolt or nut blanks in and see that as each step 



204 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

is completed on the machine the succeeding tool is applied 
to do the next step at the proper time. 

(b) The modern drill press. In some cases the drill press 
has a great number of spindles, so that the one machine turns 
out a number of pieces of work at the same time. Here the 
attendant must be constantly on the alert to see that the vari- 
ous spindles are supplied with material in order to keep the 
entire machine productive. 

(c) The modern loom — an excellent illustration of this 
type of machine. The more recent loom will stop whenever 
a thread breaks in either direction in the cloth. The atten- 
dant must be capable of tying the broken threads and start- 
ing the loom at any time. He must be deft in handling the 
material and must not mix threads or get them tangled in 
the weaving process. 

(d) The modern spinning frames or spinning mules. 
These do not require very great skill on the part of the atten- 
dant, but do need adeptness in handling the fine threads. 

(e) The slotting and modern key-way cutting machines 
of the machine shop. The attendant must adjust the feed or 
rate of cutting to suit the requirements of the material or the 
machines, and must be able to select the pro]3er tools for the 
various cuts. The tools are readily learned and do not vary 
with the same material and cut, so that after once learned 
such machines can be run by an ordinary person. 

(8.) The third type of machines requires great skill to 
run because such machines are designed either to handle a 
large variety of work which must be performed with exact- 
ing accuracy or they require unusual steadiness of nerve and 
skill to operate. Examples of these machines are : 

(a) The large lathes and milling machines in general 
machine shops. These machines get a great variety of work 
every day; sometimes they are used to bore out cylinders, 
again to turn shafting, and in fact one never can tell just 
what they may be called upon to do. 



THE LABOR FORCE 205 

(b) Large planers and shapers are another variety of 
the same class of machines. They may be used to cut 
grooves, smooth off the top of plane surfaces, finish the sides 
of castings, and the variety of castings they may be required 
to handle is indefinite. 

(c) Steam hammers in forges, such as make ship work 
and other heavy forgings. 

(d) The roll sets which make steel rails, structural iron, 
ship plates, and other work of a similar type. 

This third class of machines requires the services of the 
third class of workers discussed below. 

III. A high grade of shilled lalor. — The worker need not 
be of powerful physique, but he must be in good health, and 
possess the following qualifications: 

1. Ability to interpret accurately complicated instructions 
either from blue prints, drawings, or from written or oral 
communication. 

2. Ability to concentrate attention on details, to use skill 
and patience in accurately carrying out, in the concrete re- 
ality, the pictured idea of the inventor or engineer. 

This class of laborer is the most highly skilled non-pro- 
fessional group of people in existence, and must be well paid. 
Indeed, they frequently obtain wages which compare favor- 
ably with the salaries of teachers and the incomes of lawyers, 
doctors, and other professional men. They are needed in 
foundries to make complicated castings, in the pattern shop 
to produce the patterns for the foundry, in the machine shops 
to run the large lathes and machines to which jobs of varied 
dimensions are assigned. Such a man is entrusted with val- 
uable material, and if he makes a mistake its results are far- 
reaching. A pattern-maker once misread a drawing, making 
the inlet into the condenser on the wrong side of the condens- 
ing apparatus. The pattern went through the foundry. The 
casting came into the machine shop and was machined in 
many parts before the mistake was discovered, and it cost 



206 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

the firm some $800 to rectify the error. In another case, a 
man in charge of one of the large lathes misinterpreted a 
drawing and turned a certain piece of material one thirty- 
second of an inch smaller than it should have been. The 
casting was some forty inches in diameter and seventy-odd 
inches in length. The mistake was discovered when it was 
attempted to fit it into the other parts, and it was utterly 
worthless — a loss of several hundred dollars to the firm. It 
is absolutely necessary for men holding such places to be 
thoroughly equipped. To train a man for this rank, he 
must first of all be intelligent, naturally resourceful, and pos- 
sess the innate ability to visualize a described idea. To ob- 
tain the development of these latent qualities the workman 
must have : 

1. A preliminary education of such a degree that he can 
readily acquire an accuracy in interpreting instructions. In 
a word, he must have a receptive, active mind. 

2. He must serve an apprenticeship. This preparation 
must be in shops, night schools, and other places where he 
can learn more than the mere routine of his tasks. He must 
attain the attitude of mind that we look for in the profes- 
sional man, the ability to depend on himself for carrying out 
work, and an unwillingness to jump at conclusions. 

The great problem of a manager in any place is to intro- 
duce machinery and so to arrange the work that the unskilled 
worker will be unnecessary, and the call for the highly skilled 
man will be small. Unskilled exhausting toil is so monoto- 
nous that the employee can take little or no interest in his 
duties, and the work itself is so unprofitable that a concern 
cannot afford to give a wage that will encourage men to be 
alert and faithful. The man reasons rightly that if he gets 
discharged he can get as good a job in another place; and if 
he doesn't find an opening, society will give him a living at 
least, which is little, if any, less than he is now getting out 
of all his exertion. 



THE LABOR FORCE 207 

An organization which must have a large number of the 
third class of workman, the highly skilled man, is likewise 
undesirable, not because his services are not valuable, but 
because so much depends on him. His grade is so high that 
it is difficult to obtain him. He is well worth his wages in 
any organization if he is efficient and does not make mis- 
takes ; but if he does err, even occasionally, considerable loss 
may be entailed. Therefore it is highly desirable to get 
machinery to do as much of his work as possible. 

The second class of worker is the most desirable. The 
advantages of this class are: 

1. A short apprenticeship makes the man valuable to the 
employer. 

2. The employee with his limited capacity feels his de- 
pendence on the employer, and is likely to be a faithful and 
attentive workman because he receives a larger income than 
the ordinary laborer, and could in most cases obtain employ- 
ment only as a less valuable man in another place. 

3. The employee becomes very dexterous in doing one 
thing, and is thus able to turn out a large product. 

It is possible to run but few plants without using more of 
the third class than are readily available. They are neces- 
sary as bosses and leaders of the first and second groups, and 
unfortunately they cannot be developed rapidly from either 
one of them. Shop managers find themselves seriously han- 
dicapped, from time to time, in getting men who can take 
charge of departments, who can become gang bosses and fore- 
men in the various divisions of the organizations. So im- 
portant has the specialization of labor become that the old 
style apprentice in the shop has almost completely vanished. 
A few weeks of practice enables a man to run a loom, but to 
get a good loom foreman a man should come through an ap- 
prenticeship which has taught him every part of the loom and 
its running mechanism. It takes a very short time to learn 
to run a drill press or milling machine, but it is an exceed- 
15 



208 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

ingly hard proposition to get a man who can tell what classes 
of work should go on the machines, how they should be at- 
tached, how the tools should be adjusted, and a hundred and 
one other such matters. It requires little intelligence to 
scrape in a valve seat, but it requires skill to set the valves 
of the variety of engines that come into some of the large 
general shops. So pressing has the need of this highly 
skilled class of mechanic become that in spite of the profit- 
ableness of the second class, corporations now make every 
effort possible to encourage young men to advance past the 
mere routine of making goods. A number of large concerns 
are devoting a great deal of attention to the development and 
teaching of apprentices. 

Apprenticeship. — The General Electric Company of 
Lynn, Massachusetts, about 1902 put into operation an ap- 
prenticeship system which has proven to be beneficial both 
to the firm and the employees. They organized a special de- 
partment devoted entirely to the training of apprentices. This 
department was put under the direct control of a superinten- 
dent, who was especially qualified to teach young men the 
principles of their trades. The company also established 
class rooms in the factory in which the boys are taught 
drawing, and are given instruction in engineering science. 
The training received by a student at Lynn is so broad "that 
the graduate apprentice is prepared to fill a position as a 
skilled journeyman or as industrial foreman in any mechani- 
cal establishment. " * 

The Baldwin Locomotive Works of Philadelphia is an- 
other well-known firm which has established an apprentice- 
ship system. They have not, Jiowever, set apart a separate 
school or department for the training of the young men. A 
learner goes into the various shops and departments and 

1 The Annals of the American Academy of Political and Social 
Science, Vol. XXXIII, No. 1, January, 1909, p. 143. 



THE LABOR FORCE 209 

gathers knowledge and experience from things as they actu- 
ally go on in the usual course of events in the works. In 
order to provide for several classes of apprentices they have 
made provision for three classes of applicants. 

Apprentices of the First Glass. — The first class includes 
boys of seventeen years of age who have had a good common 
school education, and who bind themselves by indentures 
(with the consent of a parent or guardian in each case) to 
serve four years ; to be regular at their work ; to obey all or- 
ders given them by the foreman or others in authority; to 
recognize the supervision of the firm over their conduct out 
of the shop as well as in it; and to attend such night schools 
during the first three years of their apprenticeship as will 
teach them, in the first year, elementary algebra and geome- 
try; and in the remaining two years, the rudiments of me- 
chanical drawing. 

Apprentices of the Second Class. — The second-class in- 
denture is similar to that of the first class, except that the 
apprentice must have had an advanced grammar school or 
high-school training, including the mathematical courses 
usual in such schools. He must bind himself to serve for 
three years, and to attend night schools for the study of me- 
chanical drawing, at least two years, unless he has already 
sufficiently acquired the art. 

Ap)p)r entices of the Third Class. — The third-class inden- 
ture is in the form of an agreement made with persons 
twenty-one years of age or over, who are graduates of col- 
leges, technical schools, or scientific institutions, having 
taken courses covering the higher mathematics and the nat- 
ural sciences, and who desire to secure instruction in practi- 
cal shop work. 

The indenture or agreement in each case obligates the 
company to teach the apprentice his art thoroughly and to 
furnish him opportunity to acquire a practical knowledge of 
mechanical business. The firm is also bound to retain the 



210 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

apprentice in service until he has completed the terms of the 
indenture or agreement, provided his services and conduct 
are satisfactory. In all cases the firm reserves the right to 
dismiss the apprentice for cause. 

The rates of pay in the different classes are as follows : 

1st year 2d year 3d year 4th year 
per hr. per hr. per hr. per hr. 

Apprentices of the First Class 7c. 9c. lie. 13c. 

Apprentices of the Second Class 9c. lie. 13c. 

Apprentices of the Third Class 16c. 20c. 

In addition to the rates mentioned above, apprentices of 
the first class each receive an additional sum of $125, and 
apprentices of the second class an additional sum of $100, 
at the expiration of their full term of apprenticeship. 

By the course of training provided for in this system, it 
is believed that a great benefit will accrue to the mechanic 
as well as to the employer. To young men who have received 
a thorough technical education, the two years' course in shop 
work is especially recommended.^ 

Mr. N. W. Sample, superintendent of apprentices in the 
Baldwin Locomotive Works, states that the system has proven 
quite satisfactory. 

"Three years after the first indentured apprentice completed his 
term, there were employed over two hundred graduated, first- 
class, all-round mechanics capable of assignment to any shop, and 
of this number fifty occupied places of responsibility as heads of 
departments, foremen, assistant foremen, contractors, and leading 
workmen. It is no longer necessary to go outside of the works 
for any talent desired." ^ 

The^Westinghouse Electric and Manufacturing Company 
is another firm which is laying much stress upon the proper 

1 Circular No. 3, Apprenticeship System, Baldwin Locomotive 
Works. 

2 The Annals of the American Academy of Political and Social 
Science, Vol. XXXIII, No. 1, January, 1909, p. 177. 



THE LABOR FORCE 211 

development and training of young men for their works. 
They have two apprenticeship systems, that of the Trades and 
that of the Engineering. The former is designed for young 
men who have not had a technical education. The latter 
is intended for graduates of technical schools and colleges. 
The Trades Apprentices are recruited from young men 
between the ages of 16 and 23 years. All under 21 years 
must have their parents' or guardians' consent embodied in 
the agreement which is made with the company. The term 
of service for the Trades Apprentice is four years, while that 
of the engineering class is two. 

The company is generous in its treatment of the men. 
They are given very fair remuneration during their term of 
service, and are promoted from task to task as their capabil- 
ities develop. The promotions are accompanied by graded 
increases in wages. The trades apprentices are started at 9 
cents per hour, and at the end of each year receive an increase 
of 3 cents per hour until they complete their term. The en- 
gineering men are started at 18 cents per hour, for which 
sum they work one year of the time, or 2,740 hours. After 
this first year of service, they are remunerated at the rate of 
20 and 22 cents per hour, the former rate being granted for 
the first six months of the second year, and the latter being 
for the next six months. 

The firm takes care that the young men to whom they 
grant the privileges of apprenticeship have the fundamental 
training and native ability to make proper use of the oppor- 
tunities. Those who desire to become enrolled in the work 
are obliged to make application in their own handwriting, 
and must tell their father's name, state his business, they 
must give their name, age, height, weight, educational and 
other training, the foreign languages they speak, the degrees 
they have received, and the schools or colleges they have 
attended, and no one is considered who does not submit a 
recent photograph. 



212 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

While they are serving their time an exact record is kept 
of their conduct and performance within the j)lant; and, if 
they are trade apprentices, their outside night school work is 
carefully graded and recorded. They are marked for work- 
manship, personality, and outside class work. A young man 
has an incentive to do his best in every department ; because, 
if at any time he becomes incompetent through neglecting 
his work or studies, or is insubordinate, he is liable to dis- 
missal. Dismissal means he loses both a job and a chance 
to better his future condition. If he honorably completes the 
term of service, the firm in the case of trade apprentices pre- 
sents a substantial reward in the form of $100 and a diploma, 
which tells the world that he is competent to follow some 
definite line of work. The engineering apprentices receive 
no gratuity, but obtain certificates. 

Nothing so clearly indicates our progress both in the in- 
dustrial and educational fields as do these highly organized 
apprenticeship systems. This development has taken place 
within the last ten years. Indeed it is not that long since 
apprentices in some places were started in at $2 per week, 
and raised a dollar or so every year until they were earning 
a weekly wage of $6 by the time their terms expired. In 
the older shops, his training depended very largely upon the 
caprice of his foreman and his own assertiveness. If he were 
wide awake and insistent upon getting acquainted with all 
classes of work which went on in the shop, he would get a 
good training. If, however, he were not a favorite or a for- 
ward kind of youngster he would frequently secure a poor 
training for a future career. 

The writer knows of one plant which still has the old style 
of apprenticeship contract, and the trouble it has had to find 
competent foremen, gang bosses, and workmen is evidence 
that a far-sighted, generous policy is the most profitable. 

Individual Ability. — No firm can hope to be successful 
if it is dependent upon unusual ability of any considerable 



THE LABOR FORCE 218 

portion of its workers. A large number of firms whose work 
is of such a nature that a formal system of indenture is inad- 
visable or impossible have adopted the policy of supplying 
an understudy of some kind to every man who has charge of 
a department containing a number of men. This assistant 
or helper is expected to acquaint himself with all the duties 
of his chief, and is supposed to act in his absence. In this 
way the plant is never at a loss to fill any position which 
may be vacated in any department. One large organization 
engaging some 40,000 em]3loyees will not promote one from 
a lower to a higher position unless that same man has trained 
a subordinate to fill his position. This insures to the firm 
available workers for every possible position, and it also has 
a tendency to develop a very friendly feeling between the 
heads of departments and their assistants, because the de- 
partmental head sees that it is to his distinct interest to have 
capable subordinates. 

Another firm takes the attitude of fearing the coming 
man. Every foreman or division head likes to impress all of 
the superior officers with the idea that, if he leaves, the de- 
partment will suffer. In a measure he speaks the truth, be- 
cause those individuals take care to have subordinates who 
possess few of the larger qualities needed by men of initia- 
tive. The firm as a consequence is terribly handicapped, and 
as is to be expected, the work in the departments is so 
unsatisfactorily performed that every few years there is a 
general ''shake-up" in the plant, entailing the resignation 
and dismissal of a large number of the departmental heads. 
Thus the short-sighted policy pursued by every one in the 
plant to hold his job is the very thing that is hindering his 
personal advancement and the general prosperity of the firm. 
This concern has not paid a dividend on its stock for more 
than a half dozen years, while the former company's stock 
has averaged 7 per cent for a generation. 



CHAPTER XV 

THE PAYMENT OF THE WORKMAN 

In order to get the maximuni product from any set of 
employees, tlie manager must consider: 

1. The best methods of keeping the men employed at 
their maximum limit while within the plant. 

2. The best methods of making their work accurate. 
When one establishes a wage scale he should have those 

two objects in mind. 

The greatest incentive a man can have to work faithfully 
is to be paid according to some scheme whereby his remu- 
neration is directly proportional to his output. How to estab- 
lish a wage scale which will yield this maximum output for 
a minimum wage cost is a problem that has troubled man- 
agers for years. 

The oldest scheme of wage payment is to pay the worker 
a certain fixed sum for the time he is employed in the plant. 
In the hands of a vigorous overseer thoroughly conversant 
with all the work in the plant, the time system proves satis- 
factory provided the plant is so small that the foreman in 
charge can keep in constant touch with all that is going on. 
From the employer's point of view it might appear that 
nothing can be more perfect than the time system of wage 
payment; because every increase in output that the man 
makes means an absolute gain to the owner of the plant. 
The curves ^ ^ ' in Fig. 24 show how increased exertion 
contributes to the profits of the firm; the employee gets the 
same compensation whether he does one piece or a hundred, 
while the employer can see with glowing satisfaction his 
wage cost per unit dropping downward. There is but one 

214 



THE PAYMENT OF THE WORKMAN 215 

difficulty with which the employer must contend in this re- 
munerative scheme. The employee will not give his best 
efforts so long as added exertions do not bring immediate 
returns. The only tangible encouragement a man has in the 
time system is that his rate of pay will be increased from 
time to time as he demonstrates his worth. In a large shop 
it is impossible for a foreman to be in such intimate contact 
with all the men that he can make wage adjustments that 
will be strictly fair to each individual. It is hard to measure 
the efficiency of a man by his general attitude or by his talk. 
Some of the best talkers and apparently most industrious 
workers may be confirmed loafers and the least efficient men 
in the firm's employ. 

The only practicable way of establishing a satisfactory 
time-rate system is to divide the men into groups or classes 
and fix a maximum and minimum rate for these classes. If 
a man is valuable he may get his wages raised to the maxi- 
mum within the class, or he may be advanced to another 
class. The wages are fixed by bargain between the men and 
the employer. This bargaining may be done either collec- 
tively at the dictation of a labor union, which fixes mini- 
mum wage rates, or it may be done by the individual work- 
men fixing their wages with the foreman. At best, the wage 
adjustment is largely guesswork so far as rewarding individ- 
ual men for what they do. 

Unless there is some means of measuring what a man 
does, it is unsafe to depend upon personal likes and dislikes. 
Here lies the inherent weakness of the time-rate system. A 
foreman will often raise wages not because a man actually 
produces more, but because he thinks the man more efficient. 
Managers in plants have long appreciated the fact that there 
should be a different method of fixing standards of wage 
payment than on the basis of personal conjecture. 

The average man is not inclined to overexertion. Fre- 
quently his chief aim seems to be to do the least amount of 



216 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

work necessary to keep from getting discharged or being re- 
duced in pay. Foremen are much annoyed and firms lose 
thousands of dollars through the idleness of men from one 
cause or another. A great deal of this lack of energy on the 
part of the men is not due to wilful idleness but to oversight 
on the part of the foremen. Men will frequently get a job 
completed and wait with perfect complacency until the fore- 
man comes to them with another task. In some poorly run 
shops men waste as much as half a day waiting for the fore- 
man to find out that they are ready for a new job. There are 
also other kinds of time losses. Men will frequently wilfully 
kill time in order to make work last. Machines v/ill not be 
run to their maximum capacity because to do so will finish a 
job so long before quitting time that it will be necessary to 
lift off the piece and adjust another about the time the whistle 
blows. One will sometimes see men in day-rate shops actu- 
ally make their machines run without doing anything at all 
in order to appear to be working and so do away with the ne- 
cessity of changing a job at some inconvenient time. Man- 
agers of plants are not ignorant of these conditions. The 
wilful dishonesty and lack of willing cooperation on the part 
of the employees have made the daily wage system a poor 
means of remuneration for many kinds of work. Wide-awake 
men rightly reason that if a scheme could be devised by 
which workmen lose money for idle time, they would not be 
so inclined to sit with bovine patience until their foreman 
finds them out of work and starts them on another task, 
neither would they be apt to waste time wilfully in order to 
start new work at a more convenient season or to save a job 
when work is getting low in the shop. 

It is rational to assume that the remuneration for labor 
should be on the basis of all ordinary commercial transac- 
tions, that the man should be paid for what he does, that 
compensation should be by the piece-rate system. There can 
be no more effective way to prevent idleness, because the 




'^1v?4lfeM^^^-l-^: 



I 



lo 



2 3 4 5 6 r* 8 

*-'^- Pieces PETf? Hoof^- — 

Fig. 24.— Comparison of the Time-Rate and Piece-Rate Systems. 



218 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

idler is fully as much a loser as the firm. Viewed from the 
workman's standpoint, there can be no more profitable means 
of remuneration. Fig. 24, on lines BB^ shows that on the 
piece-rate system of wage payment a man automatically 
raises his hourly rate by increasing the output. The firm 
apparently does not gain directly from the increased effort, 
as is shown by the fact that the wage cost per piece is a con- 
stant quantity. (See lines B' B' ^ Fig. 24.) From the dia- 
gram one would conclude that the piece-rate system of wage 
payment would be a system strongly advocated by the work- 
man. The opponents of the piece-rate system are not the 
employers, but the men. Their opposition is based upon 
good reason, and yet, from the employer's point of view, it 
is almost impossible to eliminate the objection. To fix piece 
rates one must be guided by the capabilities of the em- 
ployees. When managers introduce the scheme they try to 
be fair to the men and estimate the time it will take to per- 
form certain tasks on the basis of previous time records made 
by men employed on the day-rate system. These records are 
from the very nature of the case inaccurate, and it is found 
invariably that nearly every one underestimates the work- 
man's efficiency when he has an incentive so great as that 
offered by the piece-rate system. In some cases the output 
of the workman will increase seven and eight times his esti- 
mated maximum. 

Under these conditions the manufacturer finds he is often 
paying extravagant prices for labor which is either unskilled 
or semi-skilled in type. In these competitive days, he can- 
not afford to pay exorbitant daily wages to men whose train- 
ing is of a low order, because his competitors will soon adopt 
a daily wage or a piece-rate schedule of a very much lower 
wage standard. The result is that the piece-rate system of 
wage payment in industries, which have not been thoroughly 
standardized and developed, has been found exceedingly un- 
satisfactory, because the workmen consider it unfair to cut 



THE PAYMENT OF THE WORKMAN 219 

their rates, and the managers find it almost impossible to 
establish a rating which will be satisfactory to themselves 
and to the employees without considerable adjustment. 

The breakdown of the piece-rate system is due to the fact 
that it is impossible to adjust rates without friction. The 
men consider every reduction of the piece rate an illustration 
of the employers' greed, while the employers feel that the in- 
creased output is another example of how grossly employees 
have deceived them in the past in order to mislead them into 
paying excessive wages. Both sides feel disgruntled. 

Employers who have experimented with this system and 
have discovered the skill a laborer possesses, have endeavored 
to apply the theory of giving a large incentive to some one 
who can guide and direct the men and yet pay these workers 
a day rate. There are plants in this country which apply 
this scheme, and call it the Contract System. The foremen 
in charge are given a certain price for the work they do, they 
hire and direct the men, usually paying them on a day basis, 
and fixing their wages at the lowest possible point the men 
will agree to take. Under the contract system of working, 
the foremen have their income based upon the work they can 
get from these men. The scheme has a tendency to develop 
a body of alert overseers who are always after the men to see 
that they are not wasting time either through laziness or by 
incompetence. The system when it operates makes men 
work, but it has the unpleasant disadvantage of developing 
slave-driving habits. Many men will not stand for such 
treatment; and unless the work is of such a nature that a 
rather low type of worker can be employed and taught the 
tasks to be done, the company is liable to have a great deal 
of trouble with its labor under this contract system, although 
in some plants it has worked successfully for many years. 

Mr. Henry R. Towne, a number of years ago, conceived a 
scheme which has had a profound influence upon pay sys- 
tems, because he introduced an incentive rather than a coer- 



220 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

cive process to get men to increase their exertions.^ His 
scheme is briefly this — find out what has been the average 
cost for a given amount of output in the best year before he 
introduced the system. With this as a unit he determines 
what the labor cost for the same quantity has been for each 
succeeding year. The difference in labor cost between the 
two gives him the savings made for the firm by the extra 
effort of the labor force. This saving he distributes in the 
following way: 50 per cent is retained by the firm, 10 per 
cent is given to the foremen in charge of the work as an 
inducement to them to get men to increase output, 40 per 
cent he distributes to the gang bosses and workmen through- 
out the plant on the basis of their annual wages. The re- 
muneration is given at the end of the year or at the end of 
some considerable length of time shorter than a year. 

This sharing of the gain with the men has in it a num- 
ber of defects, the most important of which are : 

1. The reward is remote. 

2. The method of division is not likely to encourage great 
activity because the men do not receive shares in proportion 
to their individual efforts. 

Some writers have criticised the system, because it makes 
the men share gains which they say may be due to improved 
methods of work or to better management. There may be 
some basis for this statement, but Mr. Towne's paper dis- 
tinctly stipulates that the books shall be so kept that any 
improvements in management will not be shared by the 
workmen save in so far as they actively assist in the work. 
The paper specifically notes that it is only fair to share with 
the operatives the savings which their activity makes for the 
firm. 

The remoteness of the reward and the method of division 



^ Transactions American Society of Mechanical Engineers, Vol. 
X, p. 600, No. 341, "Gain Sharing," by Henry R. Towne. 



THE PAYMENT OF THE WORKMAN 221 

are, however, serious objections, and these Mr. F. A. Halsey 
circumvented when he presented the premium plan of remu- 
nerating labor.' Mr. Halsey believed with Mr. Towne that 
the workman should be rewarded only in so far as his actions 
lower production costs. He, however, appreciates the fact 
that a much better incentive will be given to men if they are 
paid at once their exact share of all the profit they make. 
His scheme is briefly this : 

A man is given a certain rate per hour. A piece of work 
is assigned to him which will be allowed a certain number of 
hours time in which to be done. If the man performs the 
work in a shorter time, he will be given a fixed percentage of 
the value of the time saved. This extra sum will be paid to 
him as a premium to his wages, and on that account the 
Halsey scheme is called the Premium Plan of Remunerating 
Labor. The idea of the scheme is to establish the shop on a 
piece-rate system, in which the men will be guaranteed a 
certain daily wage. If the management has fixed the price 
of the unit of work performed at too high a figure the work- 
man will share his extra productive value with the manufac- 
turer in a manner that will not require the cutting of the 
rate. In a word, by dividing the gains due to his extra pro- 
ductivity, both the manufacturer and the worker profit, and 
the worker will have no reason to limit his output because 
there will be no rate cutting. 

The lines A A, Fig. 25, show how by this system a man 
increases his hourly wage in a very material way by increas- 
ing his productivity. At the same time he cuts the unit 
price per piece considerably for the firm. (See lines A'A% 
Fig. 25. ) The figure shows just how Mr. Halsey manages 
to make unnecessary any cuts in the unit rate. By his sys- 



1 Transactions American Society of Mechanical Engineers, Vol. 
XII, p. 755, "Premium Plan of Paying for Labor," by F. A. 
Halsey. 



222 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

tern, the workman by increasing his wages actually cuts the 
cost of production. His only method of obtaining a big 
reward is to cut the unit cost. Thus the employer has a 
decided advantage. If we look at the other term of the con- 
tract we find that the workman is guaranteed a standard daily 
wage, so that he can feel that he is not on the piece-rate sys- 




FlG. 



S € 7 S 9 to 
--^ Pieces p^F^ H^ui^ww-v 

25. — Comparison of Halsey and Rowan Premium Plans. 



tern. If the price per unit has been set too low, he is not 
comjDelled to overexert himself in order to make a fair daily 
wage. 

The advantages of the Halsey system are: 

1. The men are encouraged to produce more by being 
rewarded in proportion to what they do. 



THE PAYMENT OF THE WORKMAN 223 

2. The reward is immediate and substantial. 

8. The employer, in sharing the gains of the extra exer- 
tion on the part of the worker, does not have the necessity of 
cutting the rate in an arbitrary manner, hence the workman's 
mind is relieved of the fear of having his wages reduced 
arbitrarily. 

A British modification of the system was put into opera- 
tion by David Kowan & Company. Mr. Rowan's wage 
curve is plotted B B on the same diagram (Fig. 25) , which 
shows Mr. Halsey's premium plan, while the Rowan piece 
cost is shown as line B' B' on. the same diagram. Accord- 
ing to Mr. Rowan's idea, if a job has been allotted too much 
time, even with the Halsey system, a man may get a remu- 
neration out of all proportion to the value of the work. For 
example, if a man should be allotted one hour to do a piece 
of work worth 80 cents, and if he should increase his pro- 
ductivity ten times, with the Halsey system he would get 
$1.20 an hour. This is considerably better for the firm than 
his hourly rate would be with straight piece work. The lat- 
ter cost would be $3 an hour. (See Fig. 25.) Mr. Rowan 
believes, however, that even Mr. Halsey's scheme is too 
extravagant in its reward, so he devised a plan of so adjust- 
ing the premium that every increase in wages should be equal 
to the percentage the operator saves on the time. For ex- 
ample, if a job is allotted one hundred hours and the man's 
rate is 80 cents per hour, the cost of the work would be $80. 
If he does the job in ninety hours, with his hour rate 80 
cents, the time wages on the job would be $27. He has 
saved, however, 10 per cent of the time, and gets a 10-per- 
cent increase in wages on the actual time cost. Should he 
do the work in eighty hours, the time rate would be $24. 
Twenty per cent time saved on $24, the time cost, would be 
$4.80. A comparison of the two tables will show the wage 
scale (wages rate 80 cents per hour) as worked out by the 
Halsey and the Rowan methods. 
16 



224 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 



COMPARISON OF DIFFERENT METHODS OF CALCU- 
LATING PREMIUMS.! 

Halsey's Method. 



Hours 
Allowed. 


Hours 
Taken. 


iTime Wages 
on Job. 


Premium 
Earned 
on Job. 


Total Labor 
Cost. 


Workman's 

Rate per 

Hour. 


100 


100 


$30.00 


$0.00 


$30.00 


$0.30 


100 


90 


27.00 


LOO 


28.00 


.311 


100 


80 


24.00 


2.00 


26.00 


.325 


100 


70 


21.00 


3.00 


24.00 


.343 


100 


60 


18.00 


4.00 


22.00 


.366 


100 


50 


15.00 


5.00 


20.00 


.40 


100 


40 


12.00 


6.00 


18.00 


.45 


100 


30 


9.00 


7.00 


16.00 


.533 


100 


20 


6.00 


8.00 


14.00 


.70 


100 


10 


3.00 


9.00 


12.00 


L20 


100 


1 


.30 


9.90 


10.20 


10.20 



Rowan's Method. 



Hours 
Allowed. 


Hours 
Taken. 


Time Wages 
on Job. 


Premium 
Earned 
on Job. 


Total Labor 

Cost. 


Workman's 

Rate per 

Hour. 


100 


100 


$30.00 


$0.00 


$30.00 


$0.30 


100 


90 


27.00 


2.70 


29.70 


.33 


100 


80 


24.00 


4.80 


28.80 


.36 


100 


70 


2L00 


6.30 


27.30 


.39 


100 


60 


18.00 


7.20 


25.20 


.42 


100 


50 


15.00 


7.50 


22.50 


.45 


100 


40 


12.00 


7.20 


19.20 


.48 


100 


30 


9.00 


6.30 


15.30 


.51 


100 


20 


6.00 


4.80 


10.80 


.54 


100 


10 


3.00 


2.70 


5.70 


.57 


100 


1 


.30 


.297 


.597 


.597 



The reader will observe that while the Rowan plan com- 
pared with the Halsey method does prevent excessive earn- 
ings on the part of the employee when he multiplies his 
output many times, it on the other hand gives a decidedly 

1 "Trade Unionism and Labor Problems,'* by John R. Com- 
mons, p. 287. 



THE PAYMENT OP THE WORKMAN 225 

greater reward to the workman until he more than doubles 
his productive capacity. Is this a desirable characteristic 
of a wage system? Does not the Rowan Premium tend to 
encourage the workmen to remain at a lower level of effici- 
ency than the Halsey Premium? To be perfectly fair to Mr. 
Rowan, it should be stated that his rate is adjusted for the 
purpose of making special cuts unnecessary. If a man loiters 
about his work when the rate is being set, he cannot reap too 
great a harvest by ' ' rushing. ' ' The scheme certainly does 
act automatically in reducing output cost, but it seems highly 
probable to the writer that men who work under it would be 
somewhat inclined to "nurse" their jobs when they found 
that their added exertions increased their wages so slightly 
as the system does in the later stages. 

In 1895, Mr. Fred W. Taylor read a paper before the 
American Society of Mechanical Engineers, in which he 
recognized the advantages of the Halsey system and its su- 
periority over any previously proposed scheme, but pointed 
out that it has one very grave defect — while it encourages the 
workman to do good work, it gives only a passive incentive 
by not punishing him for not doing his best. In other 
words, the Halsey system permits men to gather premium 
for work done, but it does not necessarily stimulate a man 
to produce his utmost. In order to introduce this element, 
Mr. Taylor proposed a scheme of wage payment which both 
punishes and rewards, and which he calls the differential 
piece-rate system. According to this plan, a man is rewarded 
only after he attains a certain fixed standard of work. If he 
does not accomplish the job in a given time, instead of being 
paid an ordinary piece-rate price, he is paid a piece-rate 
price considerably lower than the one paid if he does the 
work within the stipulated period. 

If the usual output of a 80-cent-an-hour man in an ordi- 
nary shop is one piece in an hour, Mr. Taylor would by his 
timing process find that an individual working at his maxi- 



226 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT 

mum rate on every part of the job could accomplish three 
pieces in an hour. He would then fix his rate as follows : 
Three pieces in an hour would be made the standard. If a 
man could perform three pieces an hour he would get, not as 
he would get in the day-rate shop, thirty cents an hour, or 
ten cents a piece, but fifteen cents a piece, or some similar 
amount, for each piece performed, so that his hourly rate, if 



1 
ftr 

D 
O 

X 

\ 

u 




Itl 



ISO 

135 



zo 



los 



90 
rs 



eo 



4S 



30 



/s 





















# 


































V>^ 


f 
















*j1 


















.^. 


?' 




































/ 
/ 




































^ 


.^' 




c< 


►^T 


r=>£ 


R Pl 


ffCE 


. 




^ 


















^^ 







I 






60 a. 
3o^ 

\s7 



\o 



a 3 ^ B e 7 S 

Pieces PEF^ )\OsiJ\ 

Fig. 26. — Taylor Differential Piece-Rate System. 

he reached three pieces in an hour, would be forty- five cents. 
If he performed more than three pieces in an hour, say four 
or five, he would still get 15 cents a piece for every one per- 
formed, so that the workman, as shown by Fig. 26, would 
raise his wages by a fixed amount for every piece finished. 
If, however, he could not make three pieces within the allot- 
ted time, he would not get 15 cents a piece, or even 10 cents 
a piece. He may be given but 8 cents for every piece made 



THE PAYMENT OF THE WORKMAN 227 

below three pieces. With such a scheme one can easily see 
that it is very important indeed, from the workman's point 
of view, to perform a large amount of work in a day. 

This plan of reward differs from any of the others in 
another essential, aside from the differential piece-rate idea, 
viz. : The time allowed to do the job is very accurately deter- 
mined. The suj)erintendents of the works make a careful 
study of the exact time it needs to take to do the Jobs, work- 
ing in the quickest known way, and the workmen are allowed 
a period just sufficient to permit them to perform the task in 
the most approved fashion in which it can be done. Thus 
there are two ideas involved in Mr. Taylor's differential 
piece-rate system: (1) a punishment for one who does not 
perform the task, and a reward for the one who does, which 
is the method of payment idea; and (2) the workman has 
accurately determined for him by his superiors the time it 
should take to do the work. In a subsequent paper entitled 
"Shop Management, "1 Mr. Taylor discusses in detail his 
method of ascertaining the time it should take a workman 
to perform his task. Every job is divided into its elemen- 
tary operations ; and an attendant, by means of a stop watch, 
observes the time in minutes and seconds it takes a good 
workman to perform each part. The total time of the job is 
then fixed by adding together the time it takes to accomplish 
all of these elementary steps. With the time thus deter- 
mined, a task is given which will keep a good man busy in 
performing, and yet which is within his possibilities. Mr. 
Taylor emphasizes the idea that the task must be so hard 
that only a first-class man can perform it. He gives high 
wages and secures a low labor cost by accurately determining- 
the maximum possible output of a workman, and compell ' 
him to reach that standard. He utilizes the hitherto un 



1 Transactions American Society of Mechanical Engineers, Vol. 
XXIV, pp. 1337-1480. 



228 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

alized possibilities of the laborer by learning what those pos- 
sibilities are, and giving the reward only if they are attained. 

The Halsey system, as criticised by Mr. Taylor, is defec- 
tive, because it does not give the workman a definite goal to 
reach, hence the high wage paid does not reduce the output 
cost as it should. 

In the Americcm Ungi?ieer and Railroad Journal for 
February and December, 1906, there appeared two articles 



o 
o 



bJ 





I 



\SOt 



\^5 




Fig. 27. 



^ 



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On ^ p\ 



<>><J^ 



M/aqc 



'^'^S '" ^mr ^^*<^ w»iMn?i. «.^^ « »< ^.xi- 
■*= V#-- 5=fCH? OWhr< f—w^ &r^ 



ec« 



g^ 






^^^ 



!S^ 






cosf p. 






iV^ 



<»r 



tr p 



^ 



/ 



5« 



ff 



lO 



•* PIECE 5 PER HOUR -^ 

-Emerson Differential Piece-Rate System. 



descri23tive of the Santa Fe's shop-management scheme. The 
first article is entitled, ' ' Shop Betterment and the Industrial 
Method of Profit Sharing, ' ' by Harrington Emerson. The 
second article is entitled, ' ' Betterment Work on the Santa 
Fe, ' ' written by the staff writers of the Joitr^ial. These two 
articles have been the source of much comment, and of arti- 
cles in other magazines. Mr. Emerson has devised a piece- 



THE PAYMENT OF THE WORKMAN 229 

rate system, which in many respects is analogous to the Tay- ' 
lor plan. He determines from previous shop records, and 
by a careful study of the best possible ways of performing 
the work, how long it should take to do each task as it comes 
into the shop. His scheme of remuneration is, however, 
different from Mr. Taylor's as regards the basis of payment. 
After determining the minimum time it takes to perform a 
task, a man is paid a fixed daily rate of say 80 cents an hour 
until he performs two thirds of the standard task. If he 
performs the standard task, or 100 per cent, which in our 
illustration would be three pieces in the hour, he is given an 
extra reward of one fifth of the regular wages for the opera- 
tion. If he performs more than two thirds of the work, but 
less than the standard, he is likewise paid a gradually in- 
creasing bonus, as shown by curve A A on Fig. 27. If the 
workman can perform more than three pieces in an hour, he 
is paid the high price per piece for every piece he makes 
over the standard. The Emerson system differs from that of 
Mr. Taylor in one respect. It is not a piece-rate system un- 
til the man performs at least two thirds of the standard task. 
Between the Halsey system and the differential piece-rate 
system, as developed by Messrs. Taylor and Emerson, there 
is another plan proposed by Mr. H. L. Gantt, called the 
"Bonus System for Rewarding Labor. "^ Mr. Gantt 's scheme 
differs from the differential system in that it is not a piece- 
rate system, yet it is like the Taylor system, in that it does 
set a definite task for the person to perform. If the individ- 
ual performs the task within the given time, he is paid his 
regular hourly rate and a certain stij)ulated bonus. Every 
job is allotted a certain amount of time; if the man performs 
the task within this time, he is given the bonus, and as soon 
as he finishes one job he is given another, to which he is like- 

1 Transactions American Society of Mechanical Engineers, Vol. 
XXIII, 1902, p. 341. 



230 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

wise allotted a definite amount of time. The result is that if 
a man in the course of a day doubles his output, he will get 
a day's wage plus the bonuses, which are attached to the 
separate jobs he has performed. If he fails to do the work 
within the allotted time, he gets only his day's wage. 

As a matter of fact, it makes very little difference which 
system of wage payment is used. There is no reason why 
the Halsey system need be a "drifting" system, as termed 
by Taylor. The thing that makes the differential piece-rate 
system effective is that the manager of the shop determines 
the time that should be taken to do the work, and fixes his 
differential rate accordingly. Should the manager of the 
plant, where the premium system is applied, take the same 
means to determine the minimum working time, the premium 
system could be adjusted equally well. There are shops which 
have tried both the premium and the differential piece-rate 
systems; and, after giving both a fair trial extending over 
many months, found the premium plan considerably more 
satisfactory. On the other hand, there are sliops which have 
ultimately decided upon the differential piece-rate system. 
Indeed, the method of payment is not so important, if the 
concern can find a scheme that will justly determine the 
possibilities of a worker. The system of wage payment for 
this purpose is a secondary matter. The method of obtain- 
ing the possible speed at which a worker can produce is the 
real problem of management, and the real object of all wage- 
payment systems should be to reward him in such a manner 
that he will produce this maximum. 

Mr. Taylor suggests his unit-time study method to obtain 
the speed possibilities of the man; Mr. Halsey gets his data 
by studying shop records and carefully observing the men. 
Both schemes have produced good results under different con- 
ditions. Generally speaking, the unit-time study system is 
successful in shops which handle contracts of a more or less 
unvarying character, and are not compelled to follow exact- 



THE PAYMENT OF THE WORKMAN 281 

ing requirements. In one shop of a miscellaneous type which 
handled work that had to be exceedingly accurate, the unit- 
time study system^ after a fair trial extending over many 
months, proved a most dismal failure. When men tried to 
make the calculated time, they spoiled the work. In another 
shop it has proven successful, yet the same man who made 
it a success in the one shop, failed to make it a success in 
the other, and he had the cooperation of the management in 
both cases. The cause of the failure in the one shop was the 
exacting type of the work, and in the other the success was 
due to the rather crude character of the output. 

In the shop where the differential system failed the pre- 
mium system was next tried, the time being predetermined 
by previous shop records, and by keeping after the men; and 
the scheme was successful, the very scheme which Mr. Tay- 
lor so severely condemns. 

In his paper, Mr. Taylor emphasizes one thing which 
should not be passed over without some comment. He does 
not advocate the paying of high wages so much as he urges 
the paying of wages which are considered high by the aver- 
age workman of the grade he employs. His plan is to teach 
a low-grade man to do work which would otherwise be given 
to a highly skilled man. "The writer" (Mr. Taylor) "goes 
so far as to say that almost any job that is repeated over and 
over again, however great skill and dexterity it may require, 
providing there is enough of it to occupy a man throughout 
a considerable part of the year, should be done by a trained 
laborer and not by a mechanic. A man with only the intel- 
ligence of an average laborer can be taught to do the most 
difficult and delicate work if it is repeated often enough, 
and his lower mental caliber renders him more fit than the 
mechanic to stand the monotony of repetition."^ 

1 Transactions American Society of Mechanical Engineers, Vol. 
XXIV, p. 1347. 



232 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

Care must be taken not to carry that policy too far. 
There are concerns in this country employing this means to 
have their work performed. One plant has advertisements 
in papers every once in a while for men. They employ a 
high-salaried man, who is nominally in charge of a large de- 
partment, but whose work is delegated to an assistant. The 
chief of this department spends so much time getting people 
that he is not in touch with the work as he should be. He 
gets men at a low price, and just about the time they are 
trained they leave. The plant is in a state of unrest and 
irritation at all times, due to the fact that about one third 
of the working force is always just learning, and is making 
mistakes that cause the gang bosses and foremen to be 
blamed for not looking after the men. These, in turn, vent 
their spleen on the man who ignorantly makes mistakes. 
This concern, however, looks with pride upon its average 
wage rate per man, and fully believes that it is carrying out 
a sound labor policy. On the contrary, the low average per 
man being paid for work regarded elsewhere as safe only in 
the hands of skilled men is costing the firm dearly in spoiled 
work. 

In order to determine the best way to carry on a plant, 
one should not be guided by any set of opinions or by any 
one system. The manager should know the men's records, 
the amount of material that is used and wasted, the amount 
of defective products returned by purchasers, and the per- 
formances of the machinery. These are the things which his 
shop accounting system should tell, as the following chapters 
will explain. 



CHAPTER XVI 
RECORD OF THE WORKERS 

If the management establishes a fair wage scale, it can 
enforce the performance of good work by discharging incom- 
petent workers, because well-paid men want to do good work 
in order to hold their jobs. If the wage scale is unfairly low 
the workmen will be able to find better, or at least as good, 
employment elsewhere, so that discharge is no threat to com- 
pel good work under these conditions. Assuming a fair 
wage scale, how can the management enforce the performance 
of accurate work? Obviously, there is but one way, and 
that is to punish the workmen who turn out poor work. 
Good management dictates more than a policy of hnding out 
what each man does. To have good work turned out as a 
matter of course, is the goal for which all concerns should 
strive, and this can be done only by getting rid of the poor 
men and by seeing that no incompetent men are re-employed. 
To keep good men, rewards must be given either by promo- 
tion or advances in wages from time to time. To reward the 
right employees, there must be an accurate record kept of the 
men from the time they enter the plant until they leave it. 

For a small shop, a foreman can be secured who may be 
entrusted with determining the efficiency of the employees, 
because if he is in the habit of being easily deceived by in- 
competent assistants, the defect soon manifests itself to the 
management. In large plants, however, good foremen are 
frequently embarrassed by poor workmen; and, many times, 
poor workmen, after being discharged from one department, 
find employment in other departments until their delinquen. 

233 



284 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

cies are again discovered. If insufficient record is kept of 
their service in the plant, they may, after a time, be re-em- 
ployed in the department in which they first demonstrated 
their inefficiency, and even under the original foreman. 

No ordinary person, having under his constant guidance 
three hundred to four hundred men, can keep in mind all 
past employees. It is not hard to discharge a man if he dis- 
plays inefficiency, but by the time he has proven his inca- 
pacity, the firm loses money, and the man himself is being 
done an unkindness by being given even passive encourage- 
ment to work in a field for which he is unfitted. It is better 
for him to be compelled to discover a place where he will 
be serviceable, or to find an occupation more suited to his 
ability. 

Some few years ago, there was a plant which did not believe 
in keeping records of its employees. The foreman hired 
men whenever he needed help. In one instance, an em- 
ployee was caught idling and was discharged. He lost half 
a day, was re-employed in another department the next morn- 
ing, and at the end of the week, in spite of the lost time, he 
received more money for the same work than he would have 
had with his old job under the other foreman. The second 
time he "soldiered" as much if not more than the time 
before, but was circumspect enough to be employed very 
assiduously whenever the officials approached his vicinity. 

Another organization transferred men from one depart- 
ment to another without ever recording such changes in the 
main office. A vacancy once occurred in a department where- 
in a man desired to be located, arid he asked permission to 
change. The boss signified his consent by saying, "All 
right, I'll send your time to the main office." A week later 
the pay envelope showed that the man was paid for working 
in two departments at the same time. To cap the climax, 
when he reported the overpay, he was reprimanded by his 
former boss, who said, "You might have kept quiet and not 



RECORD OF THE WORKERS 285 

have gotten me into trouble. It didn't do you any good to 
squeal. ' ' And it surely did not, for the man was now com- 
pelled to wait two weeks for his next week's wage, the pay- 
master remarking that it took so much time to make the 
correction. 

In order to make the foreman responsible for good work, 
both in quality and in quantity, the manager should take 
pains to supply him with efficient men, and to do this he 
should have a working scheme that will keep proper record 
of the employees. In a large concern, this can be done to 
best advantage by establishing a labor bureau. A small con- 
cern can safely let the time department keep a card- index 
record of the men. 

The problem of the labor-employing bureau may be 
divided into several parts : 

1. To select and employ the proper laborers for different 
duties. 

2. To keep record of the employees who are still em- 
ployed, with their status as workers. 

3. To keep record of all people who have been employed 
at any time with reasons for their dismissal and their record 
as employees. 

The best basis for good judgment is accurate knowledge. 
If an employer secures accurate knowledge of an applicant 
for a place before he hires him, he can save himself much 
trouble and some expense. There are several things a manu- 
facturer should know at once about an employee. 

1. Has he any constitutional weaknesses or injuries? 

2. His approximate age. 

8. His educational qualifications. 

4. His experience. 

The first three can be gotten pretty accurately by combin- 
ing answers on the part of the applicant with personal obser- 
vation. The fourth one is not so easily determined by asking 
questions, especially if the applicant is inclined to be un- 



236 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

truthfuL Many men apply for jobs for which they are unfit- 
ted or have had a very meager preparation. In one shop an 
ex- weaver secured a position as a steamfitter by merely 
stating to the hiring clerk a lot of hypothetical experience. 
As a matter of fact the yomig man did not know the differ- 
ence between a pipe-wrench and a pipe-cutter, but he held 
the job for six months before he made too many blunders. 

The safest way to determine a man's experience is to 
have him state the names of his former employers and people 
to whom one can be referred who can tell about his efficiency 
and conduct from actual experimental knowledge. 

Considerable thought should be put upon the framing of 
the questions on the application blank. For instance, in 
asking for the practical experience the applicant should be 
requested to state the trade or occupation learned, the length 
of time in service, and what was done while in service. In 
this way the applicant will give definite information con- 
cerning his work and will not have a chance to branch off 
into meaningless generalities. Every question should be so 
framed that the answer to it must be brief and give definite 
information about one thing. 

Some firms require the applicant to state age, whether 
married or single, whether he uses drugs, liquor, or tobacco, 
whether he belongs to a union or not, whether he is a citizen 
of the country, if he knows anyone in the plant, why he left 
his former place, the number of ]3eople depending on his 
wages, whether he speaks English and can read and write, 
Y/hat wages he expects, what he previously earned, does he 
look for further advancement, why he wants to be employed 
by that particular plant, and sometimes even other questions. 
One large concern asks no less than forty questions of every 
prospective employee. When one goes to that extent he is 
getting data which even if truthfully given would be unnec- 
essary for any but the most unusual conditions. The data, 
however, cannot be depended upon after it is obtained. 



RECORD OF THE WORKERS 287 

Men, especially those in middle life, are very apt to misstate 
their ages. Several years ago a large concern determined to 
iind out the ages of all of its employees, both those who had 
been long in service and those who were just being engaged. 
In hardly any case did the men state their exact age. The 
yomiger men overstated their age from one to five years, and 
the older men understated their age five years and more. In 
one case a man of more than sixty years told the clerk, "I 
am forty-three, and if you come around thirty years from 
now I'll still be forty-three." 

Men resent questions of an inquisitorial nature. They 
rarely object to stating whether married or single ; but when 
asked why they want to be employed in the plant or whether 
they expect any advances in wages, they feel they are being 
asked what a workman once called ' ' fool questions anyway. ' ' 

Much more information can be obtained about the man 
by looking up references. Some firms make it a point to 
send but blank forms to previous employers of an applicant 
whom they contemplate hiring. Others look up the refer- 
ences of every man who applies, so that they will have a 
trustworthy list of available candidates. The letter seeking 
information about the employee should be framed in such a 
way that the former employer can answer very briefly and 
definitely questions which will give one a very good idea of 
the capabilities and personality of a man. One form of a 
letter of this character is shown below. 

Dear Sir: 

has applied for a place as 

and has given your name as reference. Will you kindly answer 

the following questions regarding , and if there is 

any other information relating to him which is of interest, we 
shall be indebted to you for it. 

1. How long was the above man employed by you? 

2. In what capacity? 

3. What was his rate per hour? 

4. What advances did he get, if any? 



238 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

5. Is he a good mechanic? 

6. Are his habits good? 

7. Is he regular in attendance and industrious? 

8. Why did he leave? 

Any information you give us will be treated as strictly confi- 
dential, and we shall be glad to answer requests of a similarnature 
regarding men who give our name as reference. 

Very truly yours, 



This letter embodies questions which can be accurately 
answered with little trouble on the part of the individual 
who receives it. Some officials object to telling the public 
or business rivals what wages they pay their workmen. If 
experience shows that firms are unwilling to state the wages 
they have paid to past employees it is well to omit the ques- 
tioUj and in fact all questions which they believe another 
company would not care to answer. The reason for leaving 
out such questions is that if there are too many objection- 
able requests there is a strong probability of the letter being 
ignored. 

After one has obtained full information concerning the 
man, the next step is to keep a record of him as a worker. 
No recording scheme is of value unless it records actions as 
well as opinions. By this is meant that one of the most un- 
safe bases for judgment of a man's ability is what some 
individual thinks of him, unless the estimate is supported 
by evidence which shows the basis for the opinion. 

The scheme which keeps record of the employees should 
do two things. In the first place, it should keep accurate 
record of what each person is doing so as to enable the fore- 
man and other officials to place the men to the best advan- 
tage in the plant, and in the second place it should make 
it impossible for men to be put on the pay-roll who are not 
doing the work they are expected to do, or who may not be 
in existence at all. 



RECORD OF THE WORKERS 239 

A good employee must at least : 

1. Be regular in his attendance, prompt in his appear- 
ance at starting, and faithful in his stay in the plant. 

2. He must be diligent v/hile within the plant. 

3. He must be efficient. 

It was shown in the previous chapter how the plan of wage 
payment develops the diligence and efficiency of the em- 
ployee, but no matter what the wage scheme is, unless it has 
back of it some recording device to keep track of what a per- 
son is doing, it is impossible to gather data for the establish- 
ment of a good wage system, or to determine the cost of the 
article; and it is likewise impossible for the management to 
ascertain who are the good and who are the poor employees. 
A man is a good man for the firm if his average record is 
good, and a poor man for the firm if his average record is 
poor. The basis for determining his standing should be, 
"What has he done?" 

Foremen are very apt to make wrong estimates of men, 
because they do not know their averages of efficiency. For 
example, in one place there is a bright, capable man who 
has on numerous occasions, in face of considerable difficulty, 
erected engines. His work has always been done with few 
men, and these not of the best, yet he has not made a 
serious mistake in the erecting of several engines. There is 
another man who on two separate occasions was likewise 
given some engines to erect. On these two occasions it hap- 
pened, through laxity on the part of the shop management, 
that he was able to borrow men from other gang bosses, and 
the engines he had to erect Avere of such a nature that he 
could use nearly all the temporary bolts and other material 
which the other gang boss had been compelled to collect in 
order to erect some previous machines. The first man's in- 
genuity in gathering material enabled the second man to take 
advantage of these conditions, and in addition he used some 
laborers who were not properly charged to the job. In the 
17 



240 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

course of the erection he made a great many mistakes, had 
holes drilled in the wrong places, which made it necessary 
to have them tapped out and filled with plugs, he did nearly 
twice as much actual work in getting the cylinders and hous- 
ings in the proper place, and his work all through was de- 
cidedly that of an amateur. Nevertheless his engines were 
done in a week's less time than were the other man's. He 
had established for himself a record in the plant, and when 
there was an opening for advancement he was given prece- 
dence over his rival. Workmen in the humbler positions 
are sometimes compelled to submit to such conditions. The 
foremen do not mean to be unjust. They cannot be alto- 
gether blamed for advancing the wrong man, when that per- 
son makes a spectacular showing. In the case above cited, 
if there had been exact time records kept of all the time ex- 
pended on each engine, there would have been a considerable 
showing in favor of the first man who did not get the reward. 

There is nothing so fatal to the discipline of a plant nor 
so disastrous to its smooth and profitable working as to have 
a body of men irregular in their appearance, who come late 
and go out at odd times. 

Efficiency is, to a great extent, a matter of faithfulness; 
and, if a firm insists upon regular and prompt appearance, 
it is paving the way for good work. There is only one way 
to stop irregularity — make it unprofitable. If a firm weeds 
out the non-dependable individuals, it will, before long, de- 
velop a good working organization. To weed out these un- 
desirables one should have an accurate record of the entering 
and leaving time of all the workets in the concern. 

One of the most effective devices of time recording, and 
the one first adopted, is the time check. This is used in a 
variety of forms. 

1. The in-board out-board form. At the entrance of the 
works are placed two boards, one marked "out-board," 
placed near the gate, and the other marked "in-board," 



RECORD OF THE WORKERS Ml 

placed farther toward the work rooms. Every man is as- 
signed a numbered check, which hangs with the correspond- 
ing number on one or the other board according as he is in 
or out of the works. While the men are filing in, taking 
their checks off the out-board and hanging them on the in- 
board, a watchman stands near by to see that no one takes 
other than his own check. The gate is closed as soon as the 
signal for starting work is given, so that no one can get to 
his check after starting time without calling the timekeeper's 
attention to the fact. 

2. A modification of the above scheme is to give the men 
actual possession of the check, which they drop in a box on 
entering the works. Obtaining the time record by either 
method is a simple matter. After the plant is started, all the 
checks are in, and the timekeeper makes a record of the num- 
bers. In the second plan he takes the checks into the work- 
rooms and returns them to the men. In this way he comes 
into actual contact with each workman, so that there is no 
possible means by which one man can drop another's check 
into the box without being detected. 

8. The third plan dispenses with the check. The work- 
man is given a number, which he must announce as he en- 
ters a specified gate. A clerk at the entrance crosses off the 
number as the employee calls it out. With this scheme, it 
is impossible for a man to give more than one number, and 
the clerk has an immediate record of the men who are in the 
plant. 

4. While these schemes are effective for plants of mod- 
erate size, or where the work-rooms are close to the entrance, 
they fail to be thoroughly satisfactory when the departments 
become scattered over a large area. Unless there be some 
kind of a check on the men after they enter the main gate, 
those disposed to shirk will take advantage of the opportu- 
nity to waste time in getting to their places after they have 
recorded their entrance. To prevent these losses the large 



242 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

firms have been forced to adopt some plan which would re- 
cord the employee's entrance into the department in which 
he is due. A check plan of surmounting the difhculty is to 
have a clerk distribute the checks at some main entrance, 
and then require each man to hang his check upon a board 
within the department in which he is working. This scheme 
proves effective in insuring the prompt appearance of the 
men in their departments, but it involves more clerical work 
than is necessary, because it requires a set of clerks at the 
entrance gates as well as another set who make record of the 
checks as they are hung in the departments. In order to 
reduce clerical work to a minimum and at the same time 
record the time accurately, mechanical devices have been 
perfected. 

5. The recording clock. The greatest improvement that 
has been made in timekeeping devices is the introduction of 
the recording time-clock. There are a number of styles and 
varieties on the market, but all aim to : 

1. Enable the employee to record his own time of enter- 
ing and leaving the plant, thus preventing errors on the part 
of timekeepers. 

2. Enable the timekeeper to compute readily the number 
of hours each employee has to his credit, thus saving clerical 
work in making up the pay-rolls. 

3. Prevent employees from entering the departments after 
starting time and leaving before quitting time. 

These clocks are often used in connection with a shop 
cost system, and have proven very satisfactory. (See Fig. 28. ) 

According to this scheme a' card is made out once every 
week or two weeks for each man. The man gets a num- 
bered card, which is placed in the rack "out" before he 
enters the plant. When he goes to his department he inserts 
the card into the slot A , depresses the knob B, which records 
his time of entering. The card is then placed on the "in" 
rack. When he leaves the plant he takes the card from the 



RECORD OF THE WORKERS 



248 



"in" rack, goes through a similar process, and records his 
leaving time, after which he places it in the "out" rack. 
This card at the end of the week, two weeks, or half month, 
records the total number of hours he was within the plant, 
and all latenesses or irregular leaving are stamped in red 
ink, thus calling attention at once to his delinquencies. At 



PAY-ROLL 
CARDS 



IN 




JOBS IN 
OPERATION 






JOBS 
AHEAD 



OUT 




PAY-ROLL 
CARDS 




By courtesy of International Time Recording Co., Endicott, N. Y. 

Fig. 28.— Recording Clock with Cost Equipment. Each clock can 
conveniently keep record of two hundred people. 

the end of every day, the timekeeper enters the daily hours 
in the total column, so that at the end of the period the 
cards can readily be made up and each man given his wages 
from the record. In many cases the back of the card is used 
as a check, so that the payment is made by merely having the 
paymaster and foreman sign and countersign the back of it. 
In any case, the cards for each man are kept and filed under 
his name, thus giving a truthful record of his regularity as a 
worker, truthful because it shows him by his own actions 
and not by a report of opinions. 



244 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

The recording clocks help in making out the pay-rolls, 
and in keeping accurate record of the men passing in and 
out of the plant; but if the time scheme does only this, the 
firm has a very poor system. Good accounting demands that 
no plan is complete unless it can be verified automatically 
from independent sources. Moreover, one should know not 
only that a man has been present during a certain period, 
but also that he was an efficient worker while he was present. 
His efficiency can be determined by knowing what he has 
done with the time recorded on his time card. 

Several schemes may be cited by which a record is kept 
of a man's actions while within the plant. 

1. Send a timekeeper around every day to get from the 
workmen the time they expend on each job or contract. 

2. Have the man list on a card his tasks from the begin- 
ning to the end of the day. 

8. Have the man record on separate slips of paper for 
each contract the hours he spent on each particular job. 

4. Have the office attach to each job, or piece of material, 
a tag on which the workman records his name or number 
and the time for his operation. 

5. Have a multiple part tag attached by the office, so 
made that as each operation is completed, the workman tears 
off a portion on which is stated his operation, number, and 
time elapsed. 

6. Have the office make out a slip for each operation to 
be performed on every piece of work for every contract. In 
this case the man is allotted the work, and the time is 
stamped when he is given the paper. When he returns it, 
it is again stamped, and the elapsed hours and minutes will 
show his time on the job. Another slip is immediately given 
him, so that he has mapped out for him his entire work. 

In the first scheme, the timekeeper is sent around to enter 
in a book the time each man spends on each contract. (See 
Fig. 29.) The time allotted to each contract may be quite 



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246 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

inaccurate, especially if the shop has several contracts or 
different classes of orders. In one plant where this scheme 
was in operation, the men would give the wildest kind of 
guesses as to the time they spent on each job. Their only 
care was to see that the amounts they apportioned around 
equalled the total time they spent within the plant. Coupled 
with its inaccuracy, such a plan entails an unnecessary 
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fore it can be finally allotted to the individual contracts. 
(See Fig. 32. ) This labor has been reduced to a very great 
extent, however, by having the time-book ruled in columns 
for each contract, and by inserting in their respective col- 
umns the time that the workmen expended. The footings of 
these columns equal the time expended on the different con- 
tracts by the end of the week. However, in places where the 
shop has a great many contracts the time-book increases to 
such large proportions, and the ruling becomes so elaborate 
that the columnar books become cumbersome and expensive. 
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assumption being that if they could record their time as they 



RECORD OF THE WORKERS 



247 



completed each job they would find it just as easy to be ac- 
curate as to be inaccurate in distributing their labor by con- 
tracts. The scheme is weak in that it is almost impossible 
to make men record their hours as they complete their tasks. 
In about eight cases out of ten the men have their pencils 
and cards securely locked in their tool boxes during the time 
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their time, apportioning the hours very largely according to 
their fancy. The result of this scheme is that it is no more 
accurate than the first, nor does it save clerical labor, because 
the cards must be sorted by contracts and then totaled on 
separate contract sheets (see Fig. 82) before they can be re- 
capitulated. In one respect, the card system does save time. 
It dispenses with the services of the timekeeper, who goes 
around quizzing the men. 

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paper for each contract on which he works. (See Fig. 88.) 
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RECORD OF THE WORKERS 249 

contracts. The men, as a rule, do not make any more effort 
to be exact in their statements because of these contract 
slips. The pads of slips, like the cards, are either locked in 
the tool boxes or are in the hands of gang bosses, who give 
them to the men at the end of the day. The separate slip 
system, however, has the advantage of saving the clerks the 
trouble of resorting the papers to charge properly the time 
to the contracts. With this scheme, the total time for each 



MACMINE SHOP 

workman's _^ A_^ /O 

NUMBER / 78-7 NAME>^^^ fi$--Hr-«^ 

OPERATIONS rTl^i ' W ^ ^, 



3 



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rj* 1^ 



Ts3JL, ^*.li*€M^{ FOREMAN 



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Size 3" X 5". 

Fig. 33. —Individual Contract Time Slip. 

contract each day can be obtained at once by one sorting, 
and then by listing on the adding machine the time cost of 
the various operations. 

The fourth method. There are two ways in which the tag 
can be used, viz. , not as a production order, or as a produc- 
tion order. According to the first scheme, as the workman 
gives the piece to the next person in line he puts on the tag 
(Fig. 34) his number and the number of hours he worked, 
stating the operations which he performed. This scheme 
tends to make the man more accurate in his statements be- 
cause the tag is always with the job, and must be filled out 



250 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

before being handed to the next worker. It saves labor for 
the clerks in analyzing the time by contracts, because each 
tag stands for one contract only, and the total time on the 
tag represents the total direct labor cost of the contract up to 
the last operation performed. The scheme does not, however, 



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Fig. 34. — This tag is not detachable. It shows 
the length of time and wage cost of each 
operation. By sorting these tags by work- 
man's number one can check the correctness 
of the recording clock or time book. 

necessarily make the men more accurate, if they desire to 
deceive; because with a number of contracts on their hands 
at the same time, some being worked upon and some await- 
ing their efforts, the men, especially if they are working 
under a premium plan or any kind of piece-rate scheme, will 
be tempted to allot time in such a way that the contracts do 



RECORD OF THE WORKERS 251 

not really get charged with their proper shares of time. For 
instance, in one place men were paid a certain price for 
reaming out holes on a certain class of work. They were 
paid another price for reaming under other conditions. It 
happened that the time allotted for the first job was so very 
generous that in spite of the fact that the second one was 
actually unfair, the men never complained because both kinds 
of holes invariably went together, and instead of stating the 
exact time it took to do each class of holes they understated 
their actual time where they had the meager allowance, and 
overstated it where they had the generous one. In the long 
run they obtained unusually high wages, and the cost was 
exceedingly unfairly distributed on the work. 

The multiple part tag used as a production order is ar- 
ranged as in Fig. 85. Every piece of work must go through 
a certain number of steps or processes. If the work is stan- 
dardized, regularly printed tags may be attached to each piece 
of material, as, for example, in a stocking factory. If the 
shop manufactures things which vary, the multiple part tag 
may be printed in blank and the steps filled in on the blank 
as they are performed. When a man performs his part of the 
task, he merely tears off the step which he performed, and 
then affixes his number with the hours worked. In this way 
the time department receives a record by contract, and like- 
wise by men by first arranging all the slips by contracts, and 
summarizing them on the contract sheet (see Fig. 82) , and 
then rearranging them by men and carrying the wages to 
each man's personal account. This form of tag is very good 
for continuous process industries or for work of a machine 
order. When, however, it is a question of the erecting of 
engines where several people work on the job at once, and 
where it takes some time to finish the job, the tags do not fill 
all the requirements, because it is difficult to enter more than 
one man's number on a space. For work of such a character 
a good scheme is to put the task under the immediate control 



252 THE PRINCIPLES OF INDUSTRIAL MA.NAGEMENT 

of a gang boss who will be held responsible for carrying out 
the details. It is well in connection with this plan to use 
Scheme No. 6, wherein the workman secures from the time 
clerk a slip of paper indicating the task his gang boss gave 
him and the time when he began it. As soon as he completes 



© 



J9i 



CONTRACT NO. 

p«9criis'i'ioPof tarn, 
QDlors. weave efc. _ 



9hippin<^ lnsfroc+io«s 



Dote rf 5hipm«rt+ 



TRACT fvvufe Time utal 



FlNl3HIN« 
Arit> RACKING 



MCNtXNQ 



OFERATINO 



l-.CiOI>tN<» 



v^CAVlMG 



R»BfeER 



FiG. 35. — Tag detachable along- dotted lines. It 
serves as a production order, besides show- 
ing time of each operation. 

the task he should be required io return the paper to the 
clerk, who will stamp the time returned, and the elapsed 
period of duration will show the length of time it took to 
perform the work. (See Fig. 86.) 

In this way, the gang boss need not keep the time nor be 
held responsible for its keeping. The workman cannot ap- 
portion the hours as he fancies, because he can start no task 



RECORD OF THE WORKERS 



253 



without his order slip, on which must be stamped, as he gets 
it, the time he received it. 

In order to use any of these devices to determine the 
efficiency of the men it is necessary to make a record of the 
men. Two schemes may be used. If the work is paid on 
the piece basis, one of the best records of a man's efficiency 
is the amount of wages he draws. This record can be kept 
in a wage-record book (Fig. 37) , where the names of all the 
men in each class are grouped, or an output record may be 



machine: shop 



Work man 5 No. 

OPERATION 



Contract No- 



Tiro© Storted 



TiiT^e Retorr>ed Elapsed Time 



For Cost Cle»-»< Only 
Rate. 



Oireot Labor. 
Tota I 



Fig. 36.— Individual Operation Time Shp for each Contract. 



made on a separate monthly memorandum output card. 
(See Fig. 38.) 

If, however, the man is paid on the day plan, it is neces- 
sary to standardize the tasks and compare workmen who do 
similar classes of work. If it is hard to standardize the 
tasks, as it is in the erecting of large machines, the gang 
bosses in charge of the erection may be charged with their 
labor costs (see Fig. 82), and comparative records made with 
other men who have worked, or are working, on similar con- 




CO 

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RECORD OF THE WORKERS 



255 



tracts. The gang boss can be held responsible for too high 
a cost; and if an exact and definite record is kept, he can at 
once be notified when his costs are running high, and be 
asked to give the reasons for it. If there is any complaint 
to make against any particular men, the foreman can shift 
the men reported delinquent to other gang bosses; and if 
through several trials the labor costs increase with these 
workmen, proper means can then be taken to improve the 
labor force. This method of comparison, sometimes termed 
the deadly parallel, does away with elaborate records and 
obviates the necessity of marking systems for the individual 



MONTHLY RCCORO vf workman w^o Jo 

workman's no name: 

AOOffCSS — 



(Goool for *wo yo<i 



When ^ncfa^Kd 

■Chanaea with da-kes 



Qtfi-f- Work 



Mf^NTH OUTPUT SOOD SPOILED Sp6iLEd\ MONTH OUTPLnL- <=^OOD SPO>LED\=PO'Le:D 



ofo 



Fig. 38.— Monthly Memorandum Card showing Efficiency of Piece 

Worker. 

men. Some firms adopt a system of grades and marks based 
upon an estimate more or less accurate of what each man 
does, and the number of mistakes he makes. While this 
scheme may have some advantages, it is, for industrial en- 
terprises, cumbersome and expensive to keep up, and it is 
really less satisfactory than the report system above outlined. 
Of course, in connection with the scheme suggested, there is 
an individual card kept for the workman or foreman; and if 
he is responsible for any destruction of material or breakage 
of tools it is recorded against him. (See Fig. 88.) 

A good way to know accurately of a man's spoiled work 

and mistakes is to have a spoiled work slip made out for his 

work as it is spoiled. (See Fig. 89.) This should be signed 

by the workman and the inspector with the reasons for the 

18 



256 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

rejection and the slip filed as an original record. At the end 
of the month the slips can be summarized, and a record made 
on his individual report card. (See Fig. 88. ) These indi- 
vidual cards soon indicate to the foremen the inefficient 
subordinates, who should gradually be weeded out of their 
departments, and deserving ones promoted as opportunity 
occurs. Every time a change is made in relation to any 



SPOILED WORK TICKET 

DEPARTMENT 



WOF?KMAlN3 No KlACHmE NO. 



ARTJCL-E NO. DEFECTIVE! 

NATURE. OP- DErECT . 
CAUSE . 



•MSPECTOR 



To be -filled in by Co3+ Clerk only 
Value <7f +'»me o-f 

Volue Of work dowe cr> To+qI 

each uoi+ +0 dafe Loss 



stze: 3ks 

Fig. 39. 

man's position, it should be entered on his permanent file 
card. (See Fig. 40.) At the end of each year the general 
average of the man, as shown by his output record (Fig. 88) , 
should be entered on the back of his Permanent Record Card 
filed in the Employment Bureau's office. (See Fig. 40.) 
This last card should not be destroyed, unless the employee 
IS known to be dead. While he is retained in the plant, it 
should be filed in one drawer, and when he is released it 
should be taken out of the employed file and entered in the 
unemployed file, so that whenever a man seeks reemployment 
he can be at once investigated. Some firms obviate the ne- 







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RECORD OF THE WORKERS 



259 



cessity of copying the workman's record twice by combining 
the essential features of the two cards shown in Figs. 88 and 
40, and filing them in the foreman's or manager's office 
while the men are engaged; and in event of discharge or 
quitting they are sent to the employment office. In this way 
the employment office has on file only the former employees, 
while the managers keep in touch with the present help. 
This method of handling cards has its advantages and dis- 



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COST or DErEOTS DUB DEPTS rof^ 
MONTHS OF- YEAR f9t 


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Fig. 42. — Chart of Errors showing Monthly Efficiencies of 

Departments. 

advantages. It is cheaper in cards, filing space, and copy- 
ing, but the cards are apt to become soiled, torn, mislaid, 
and even permanently lost in the general handling and pas- 
sage between departments. If the employment office retains 
its copy at all times, then the loss of the output card in the 
shop is not so serious as it is when only one card is kept. 

While the manager should have a record of the efficiency 
of each man in the plant, that is not sufficient. He should 
know just how much each department wastes and loses, and 
what have been the causes for all losses. A foreman's effi- 
ciency is determined by his ability to prevent men from 
wasting time and spoiling material. 






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RECORD OF THE WORKERS 261 

Two plans of recording defects can be used, either sum- 
marize the errors in tables (see Fig. 41), or make a chart of 
the defects chargeable to each department according to their 
number or cost, or both number and cost. (See Fig. 42.) 
To make the charts involves but slightly added expense above 
the cost of tabulation, because the information must be tabu- 
lated before it can be charted. The added advantage, how- 
ever, is worth more than the increased cost; because a chart 
shows, at a glance, tendencies over periods of months, while 
the table compares for only one month at a time. 

If a manager keeps these general comparative records, 
and if, in addition, he has a detailed record of why the 
losses occurred in each department (see Fig. 43), he can 
intelligently criticise the work of his lieutenants and can 
make changes which will be improvements and not mere 
' ' shake-ups. ' ' 



CHAPTER XVII 

RECORD OF RAW MATERIALS 

In the process of manufacturing goods, two classes of 
material are used, direct and indirect materials. The direct 
are those which go into the manufacturing of a product, and 
stay with it when it is in its marketable form. The indirect 
are goods used in the process of manufacturing, but which 
never become a part of the product. In making a desk, for 
instance, lumber, nails, varnish, rotten stone, sand paper, 
polishing cloth, and other materials are used. The lumber, 
nails, and locks are part of the desk when finished; while the 
rotten stone, sand paper, and polishing cloths though neces- 
sary in order to put a beautiful finish on the desk, do not 
appear as part of it when ready for the consumer. 

In making an engine it is necessary to use iron, steel, 
brass, and other metals, and also molds, oils, waste, and 
other materials which are quite as necessary as are the steel, 
iron, and brass, although they appear nowhere in the make- 
up of the engine. 

Good management insists upon two things regarding raw 
materials : 

1. The greatest care possible should be exercised in pre- 
venting waste and losses on direct inaterial. 

2. The greatest possible economy to prevent undue expen- 
ditures for the indirect materials. 

To secure maximum economy in materials it is necessary 
to: 

1. Purchase them from the lowest-priced firms when 
goods are at their lowest prices. 

262 



RECORD OF RAW MATERIALS 263 

2. See that the material comes up to the contracted 
standard of excellence in quality. 

3. See that the quantity purchased is obtained. 

4. See that the goods are delivered at the specified time. 

5. See that they are properly housed and stored. 

6. See that there is no unnecessary waste in the plant. 

7. See that no losses can occur, except through waste. 
In order to accomplish these seven ends it is necessary to 

have a complete record of the most reasonable supply firms, 
to know the best time to purchase goods, and to have an 
exact checking system. 

1. To attain the first aim, the purchasing department 
should be in constant touch with the market from which the 
raw materials are obtained. In small concerns, some mem- 
ber should gather information as to the causes that influence 
the prices of raw materials. He should find out the seasons 
when they are cheapest, should know the prices of the vari- 
ous usable qualities, and keep himself informed as to weather 
conditions, crop failures, and other causes likely to affect 
prices. The firm should also take advantage of the market, 
e.g., if a cotton manufactarer finds that he can purchase his 
cotton most advantageously during a certain month in the 
year, he should arrange his finances so that he can acquire 
his cotton at that time, but he should probably not purchase 
an entire year's stock of raw material during a single month 
or so, and then pay storage on his purchased goods and 
interest on the money used to secure them. 

Most companies have a regular purchasing agent or pur- 
chasing department to look after securing supplies. In some 
concerns, a very strict account is kept of the price quotations 
for every day in the year; and in some cases, the price 
changes are charted on squared paper, and curves are plotted 
showing price movements for each day of the year. For 
most lines of material, and for all ordinary businesses, such 
a scheme is unnecessary. Some goods have higher prices 



264 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

during some seasons than others, and the management of the 
plant should endeavor to buy during the favorable time, al- 
though if he must borrow funds, the price he pays for his 
goods will be the market price plus interest, as well as stor- 
age and insurance. 

2. Quite as important as purchasing the material at the 
right time and at the lowest possible price is to have some 
scheme by which one can be certain of purchasing the most 
useful quality of material. The common plan is for the pur- 
chasing department to establish standards for all of the ma- 
terials to be purchased, and then have all goods tested before 
acceptance. Many large concerns have well-equipped labora- 
tories that establish standards and test all purchased materials 
in order to see that they fulfil the terms of the specifications. 
In many branches of work it is not only desirable to make a 
preliminary test of the material, but also to keep track of the 
material while it is going through the plant, and to test the 
finished product of which it becomes a part. This is espe- 
cially important for plants having no special department 
for testing materials and such goods as are hard to stand- 
ardize. 

It is not difficult to keep track of materials. A continu- 
ous industry plant, which manufactures several styles and 
grades of some textile material, can keep record of the raw 
material which goes into the various lots of goods by num- 
bering the lots and recording specifically the material charged 
to these lots. Whoever buys the finished product will have 
the lot number recorded against his name. If the finished 
product from this raw material should turn out to be bad, or 
to be unsatisfactory to the customers either in wearing qual- 
ities or in other respects, they will report to the manufactu- 
rer who is able to tell, by turning to the Index Record (Fig. 
44), which shows the customer's name and lot number, 
what raw goods proved to be unsatisfactory, and, as he 
keeps a record of his purchases, he is able to tell from 



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266 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

whom he bought the unsatisfactory raw material. (See Fig. 
45.) 

To illustrate the records needed for an assembling in- 
dustry an automobile plant may be selected. The parts of 
an automobile are purchased from widely different sources. 
If the product should prove unsatisfactory, the manager will 
hear specific complaints in the form of objections about some 
particular parts of the machine. If the defect is real, in- 
vestigation will soon show whether it is due to faulty ma- 
terial or to workmanship, and if proper records are kept of 
the source of the former, it is not hard to discover where the 
fault lies. The fact that the material is bought from widely 
different sources does not offer any serious objection, because 
the firm, as a rule, buys the same parts from a very limited 
number of firms, e.g. , the engines and engine parts will come 
from one or two firms, and their products have characteristics 
which soon betray their origin. 

3. See that the quantity purchased is obtained. One of 
the most fruitful causes of losses in large concerns which do 
not have a good receiving system is shortness in weight or 
amount due either to mistakes or open dishonesty on the 
part of their employees and others. In order to see that the 
firm gets all the goods for which it pays, the usual plan is to 
establish a store-room and to let the order go through the 
following routine: Have the purchasing department make 
out the items in triplicate on a special blank, sending one 
copy to the firm from which they order, one to the receiving 
department, and retaining one on their own files. When the 
consignment arrives, the man in the store-room should be 
compelled to take his copy of the order, compare it with the 
invoice, and then check the actual items of the invoice 
against the goods received, sign the two slips, and send them 
up to the purchasing department, where they are checked 
against the purchasing department's copy, and approved. 
The invoice will be sent to the accounting department, which 









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268 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

will select the paying day and credit the firm for the amount, 
while the other slip will be returned to the store-room, where 
it will be kept on file. The store-room records should be 
kept in the form of some kind of perpetual inventory. 

A perpetual inventory is a record which shows at once 
the amount and value or the amount or value of goods on 
hand at any time. (See Fig. 46. ) To have these perpetual 
inventories correct, there must be kept for each class of goods : 

(a) A statement of all the goods received. 

(b) A statement of all goods issued. 

(c) A balance of goods on hand. 

The accuracy of the book inventory is tested from time to 
time by an actual counting and valuing of the stock on 
hand, and a comparison of the results obtained by this 
means with the balances shown on the books. 

There are two methods of keeping an inventory. One is, 
to have all the material arranged in bins and racks, and to 
have in front of every bin and rack a card or tag on which is 
placed the amounts of materials received, with dates and the 
amounts taken out with their dates. Two bins are often used 
to simplify the keeping track of the material, one bin being 
used to receive goods while they are being taken from the 
other. When the delivering bin is emptied, it is used to 
receive material, while the now emptied one becomes the re- 
ceiving bin. The double bin idea is good, if there is suffi- 
cient space available in the stock-room, because it lessens 
the accumulation of shop-worn stock. 

The record tag, however, is objectionable from two stand- 
points. In the first place, the tags are so widely distributed 
that it is inconvenient to see just how the stock stands, as 
shown by the records. It is inadvisable to remove the tags 
from the bins in order to ascertain the situation, because in 
the meantime someone may withdraw things; and, having 
no slip on which to enter withdrawals, fails to make any rec- 
ord, with a consequent inaccuracy in the records. It also 









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270 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

frequently happens that the amounts are put down on the 
slips carelessly, and sometimes even by unauthorized per- 
sons. Of course, this latter difficulty could be overcome by 
not giving access to the store-rooms to anyone who has not 
proper authority, or who is not responsible for goods. 

An inventory without these objections is a book ruled 
somewhat a.ccording to the form of Fig. 46. The book is 
put in charge of a storekeeper or a clerk, and no irrespon- 
sible person is permitted to take anything from the store- 
room. Everything received is entered in the book from 
the invoices, and everything given out must have a properly 
written requisition. Both the purchasing agent's authority 
checked against the invoices, and the requisitions are kept 
until the books are audited. The difference between these 
two shows the book balance, and should always be repre- 
sented by the actual amount of goods on hand in the stock- 
room. The balance can be verified by inspection; and if, 
for any reason, there is a discrepancy, an investigation is in 
order. 

4. While a firm may lose much on the value of the goods 
purchased if it does not have a well-planned receiving de- 
partment, it may lose the profit of an entire contract if the 
raw material does not arrive in time for use when wanted. 
In order to get material delivered in time, the purchasing 
department should be notified long enough in advance to be 
able to anticipate all needs. With an inventory ledger of the 
type shown in Fig. 46, the storekeeper has little difficulty 
in keeping the purchasing department informed as to when 
it should go into the market for riiore goods. Whenever the 
storekeeper finds his balance to be below the minimum limit, 
he must at once report the approaching deficiency, thus giv- 
ing the buyer ample time to replenish the stock. The -pur- 
chasing agent should see that the minimum limit is set suffi- 
ciently high so that the store-room will never be com]3letely 
out of anything that may be needed. The usual practice is 



RECORD OF RAW MATERIALS 271 

to have the storekeeper fill out a blank, telling the kind of 
stock needed and the maximum and minimum amounts car- 
ried. These reports are made out in duplicate, one for the 
information of the purchasing department, and one to be 
retained by the storekeeper for his own protection. The 
maximum point for the stock is fixed in order to prevent 
overbuying. 

5. After adequate provision has been made for receiving 
goods and reporting deficiencies in deliveries and lowness in 
stock, there arises the problem of the care of the material. 
Losses in material may be from three sources: 

(a) Bad storage, which causes actual deterioration in the 
goods. 

(b) Storage which makes it possible for unauthorized 
people to have access to the store-room, and to steal or pilfer 
materials. 

(c) Losses through waste. 

If goods are properly stored, the first and second of these 
difficulties will be reduced to a minimum. If judgment is 
exercised in storing material, it will be found unnecessary to 
exercise the same precautions over all materials. It is un- 
necessary in a machine shop to store the rough castings with 
the same care that one should exercise in storing heavy ma- 
chinery, and no one would exercise the same care in storing 
heavy machinery that he would exhibit in storing more valu- 
able articles, like brass ware, oil cups, electric-light bulbs, 
and various other similar supplies. The latter stock should 
be kept strictly under control, and it should be impossible 
for one to get any of these things without proper authority, 
unless by actually breaking into some room or compartment. 

While rough castings may very frequently be stored out in 
the open, it is inadvisable to do so unless absolutely neces- 
sary. There is an instance of a concern which had made 
several expensive castings of hollow wheel segments and 

arms, which it stored in the open in such a way that the hol- 
19 



272 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT 

low arms were turned upwards. In the course of a severe 
winter, which had many changes in temjDerature, the arms 
became filled with water which froze solid, and split them 
beyond all possibility of repair, entailing a complete loss to 
the company. Had the foreman in charge taken the precau- 
tion to cover the openings with boards, it would have pre- 
vented the water from getting in at all. 

There are certain fabric goods, such as raw wool, cotton, 
and yarn, which must be kept from the weather, and yet 
which are of such a nature that there is no necessity for tak- 
ing special precautions to prevent petty thieving. Workmen 
have Little use for these things in srnall quantities, because 
they cannot sell small lots to advantage; and, it is hard for 
them to dispose of large amounts, because they usually have 
to establish relations with people who will dispose of such 
materials for them. Silk, however, must be very carefully 
watched because of its value. 

The material on hand should be studied with reference to 
the liability of pilfering. The storage-rooms should be so 
arranged with shelving and racks that the material is at all 
times easily accessible for inventory, and is at the same time 
kept from contact with vermin, overheat, dampness, or any- 
thing that will hasten the deterioration of the goods. 

Besides arranging the goods so as to be available, safe 
from the weather and secure from theft, the storekeepers 
should so arrange the material that it can be found by a 
comparative stranger. There are two methods of doing this. 
One is to arrange the materials according to some alpha- 
betical plan, as for example putting all brass work, bolts, 
buckets, brooms, etc., in one section; the next section fol- 
lowing with articles begimiing with C, and so on. For a 
small shop, where the variety of goods is not large, this 
scheme is sufficient. If, however, the amount of stores is 
large, or the variety extensive, of which some are being called 
for constantlv while others are not so much in demand, it is 



RECORD OF RAW MATERIALS 278 

wise economy for the storekeeper to put the former material 
close at hand, and the less used in the more remote places. 
When this scheme is adopted, the best plan is to number the 
bins in some well-recognized order, and to have an index 
book, which lists all the material according to name, size, 
and quality or other relations, and states, opposite the de- 
scription, the number of the bin or section in which the 
listed material is to be found. Such a scheme saves much • 
space in storing, and the goods are convenient to find and 
easy to handle. 

6 and 7. After the goods have been properly stored, care 
must be taken to prevent loss of material by unnecessary 
waste and theft. Both ends can be accomplished by the same 
method, provided precautions are taken to keep everything 
under the absolute control of the storekeeper, and to hold 
him responsible for the proper issuance of goods. 

A complete record of materials taken from a store-room 
may be kept in two ways. One is the voucher or requisition 
plan, by which the person receives the goods upon the presen- 
tation of a properly authorized voucher. The other scheme, 
the budget system, does not permit the issuance of materials 
on vouchers. The two plans require explanation. 

Formerly foremen and workmen found all supplies open 
to them for the mere asking. Many shops and mills at the 
present time may be found wherein j^he workmen need only 
to make an oral request, and stock will be given out without 
further ceremony. In such plants, the storekeeper attempts 
to make a record by charging the value of the material to the 
contract on which the workman says he is employed. The 
scheme is so loose that men frequently obtain many things 
which they do not use for their work at all. In one instance 
there were men working on some things which were exceed- 
ingly grimy and oily. Their hands became ingrained with 
the dirt. A happy accident revealed to them that the grime 
could readily be removed by the application of lard oil. 



274 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

At some time every day, while they worked on that job, the 
storekeeper issued to each man about a half pint of the oil, 
presumably for the contract, but which they actually used to 
clean their hands. At that time lard oil of that quality cost 
about $1 a gallon. 

No one who has tried the plan of unrestricted issues has 
found it satisfactory where the raw products possess any ex- 
changeable or usable value, outside of the shop. Losses in 



WORKS REQU/5/TI0N ON STORE ROOM 


STORE KE C RE R. 


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fen vMrr 


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Size B" X 5" 

Fig. 47. 

stores were found to be inevitable, and it became customary 
to give out stores only to workmen having authority from 
the foreman in charge of the department, or from some other 
authorized agent. In order to carry out this scheme, shop 
accountants devised the plan of putting in the hands of 
the foremen regularly printed requisitions ruled much like 
Fig. 47. 

A workman desiring anything for his job, applies to the 
foreman or his clerk, who fills out a blank, stating the ma- 
terial, with the amount which he wants given to the man, and 



RECORD OF RAW MATERIALS 275 

then signs the slip. The storekeeper with this authority 
issues the requested goods. In small shops, where the fore- 
man has comparatively few things to look after, this scheme 
can be used with excellent results. Men will not call for 
goods or supplies which they do not need, since the foreman, 
being held responsible for all goods given out over his signa- 
ture, is not likely to authorize the order without good reason. 
When, however, a shop becomes large, the foremen are apt 
merely to sign their initials in approval of requisitions made 
out by the men. There are shops which use the requisition 
system with very poor results. In one plant where this 
scheme was in operation, the men were building some ma- 
chinery which required the use of candles. One or two of 
the workmen found after a few trials that the foreman gave 
his approval without trying to remember whether the mate- 
rials had been duplicated in a previous voucher, and without 
giving much attention to the items in the list. The O.K. 
mark was given in a perfunctory way, thus the workmen 
could get the goods by going through a mere formality. 
Two men every day made a regular practice of getting some 
half dozen candles each, which they put in their dinner pails 
and took home. Others obtained brass by the same method, 
others incandescent lamps, and the storekeeper, who would 
ordinarily have been able to check these losses, was unable 
to do so because there were, on an average, several hundred 
requisitions daily. It kept all the store's clerks busy deliv- 
ering the amounts authorized without doing anything more, 
even had they felt so inclined. 

In a large shop it is asking too much of the foreman to 
expect him to look after such leaks. His main work should 
be to see that the men are supplied with the equipment to do 
the work, that everybody is being properly employed, and 
that the work is going along with the least possible friction. 
If he is asked to do anything else, these important matters 
must suffer. The storekeeper can hardly be asked to pass a 



276 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

judicial decision as to whether or not a man should have the 
supplies called for on a properly authorized voucher. If he 
is expected to go back of the voucher, then it is he and not 
the foreman who really has the authority to issue goods. 
This would entail endless friction and needless waste of time, 
and would cost more than the saving would be worth. The 
fault is not with the men, but with the system. 

Since the requisition system fails in checking losses, a 
number of shops have sought for some other device. The 
requisition system would have succeeded had it been possible 
to prevent orders being made out for more than the require- 
ments of any job; because the storekeeper can be held re- 
sponsible for all over-issues, though the foreman cannot. 
The problem was to introduce a system that could utilize the 
storekeeper's possibilities and obviate the need of depending 
upon the foreman. 

In order to construct a large engine or electrical generator, 
engineers must carefully draw up plans months in advance, 
and must show to the utmost detail everything which enters 
into the firm's product. In these plants the great losses have 
occurred through the requisition system. In textile plants 
and continuous industry plants the voucher system has been 
very successful in stopping all unnecessary waste and losses. 
In other concerns, however, where it has not proven a suc- 
cess, the managers can use the very disadvantages of the 
work to aid their purpose. In the drawing-room after the 
drawings and plans are all completed, clerks go over the draw- 
ings and make lists of the material which goes into the fin- 
ished product. This must be done in order to let the pur- 
chasing department or agent know just what to buy. Copies 
of these lists of materials are sent to the foremen of the vari- 
ous departments so that they may know what to prepare for 
in the forthcoming new work. Someone hit upon the happy 
device of having several copies made of the lists of materials. 
One of these was given to the storekeeper. The list for each 



RECORD OF RAW MATERIALS 277 

contract is ruled as in Fig. 48, and is given to the store 
clerk with the following instructions : ' ' Issue material to any 
responsible workman who calls for it, provided the goods are 
listed on the sheet, but take precautions to get the workman's 
number against every amount of goods he takes out. When 
the list has all those items checked off, issue no more goods 
unless spoiled material is returned, or some satisfactory ex- 
planation comes from the foreman over his signature as to 
why the extra material is needed. ' ' 

This is the budget system, and it has a number of advan- 
tages. 

1. It absolutely prevents stealing, because no one gets 
goods unless he is responsible for them. 

2. It lessens waste to a remarkable degree, because any 
unnecessary calls for material are at once noted, and require 
much careful explanation as to why they are required, and 
men are not apt to be careless when they find their actions 
subjected to such close scrutiny. 

8. It inevitably brings scrutiny and questioning when the 
loss occurs. A man cannot shift his responsibility. 

4. It enables the storekeeper to tell well in advance 
just what materials he needs, so he can get ready for the de- 
mands. 

5. It lessens the accounting, because it eliminates the 
handling of the vouchers, their listing and adding at the end 
of every day. In fact, the storekeeper can make up his books 
days in advance if he so desires. 

6. It enables the people in charge to keep close watch on 
all material, because by it one can predict what should be 
the condition of the stock at any time ; and, if it is not in 
that condition on the appointed day, explanations must be 
made for shortage in stock or for delay in completing the 
contract. 

To be sure, it has some disadvantages. 

1. It cannot be operated successfully unless the actual 





































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RECORD OF RAW MATERIALS 279 

amounts of material needed for any undertaking can be 
closely estimated. 

2. In special emergencies it does not work fast enough. 

On account of the former defect, shop managers use a 
modification of the budget plan to keep a watch on materials 
like oil, waste, and things which cannot be definitely allotted 
to jobs. An approved plan in use to prevent extravagance is 
to issue to each man a certain amount of these materials 
every week, and give him no more until the next distribu- 
tion day. One firm adopts the scheme of giving the floor 
hands a couple of pounds of waste every Saturday, and per- 
mits them to have their oil cans filled on certain scheduled 
days. Those who have charge of the machines are given 
different allotments, and are permitted to get oil at any time 
they desire. 

In a shop where large work, made up of many parts, is 
being handled, or where there is a great number of regular 
orders going through daily, the budget system is without 
question the most efficient material record that can be de- 
vised. There are conditions, however, when the system be- 
comes an annoyance and expense if literally carried out. 
Suppose, for an extreme instance, that an urgent repair job 
is brought into the shop about Saturday noon, after all the 
clerks and draftsmen have left until Monday morning. To 
wait until the complete lists of materials are made out for 
such a case would be stupid folly, for the plant which needs 
the repairs will want to be running by the time the clerks 
would ordinarily have the budget ready to send into the shop. 

For repairs or special rush orders of any kind, a good 
plan to prevent loss of material and at the same time get the 
work out in a hurry is to give the foreman or some respon- 
sible official in charge of the departments the privilege of 
making special requisitions for such emergencies. After the 
contingency has been taken care of, the special requisitions 
can be assembled and the amount of used material accurately 



280 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

determined and priced. If, on comparing the issues and 
costs, as shown by these special vouchers with similar repair 
jobs or ordinary output, it is found that the issues have 
been unusually large, an investigation should be made and 
explanations sought. While such inquiry does not of course 
prevent loss or waste on a contract that has left the shops, 
it tells the management who is responsible for losses, and 
if the man at fault does not prevent future overissues, he 
should be discharged. 

These unexpected difficulties are apt to arise at any time, 
and no system can be devised to take care of them all in the 
ordinary routine, without either delay or friction, or both. 
For such instances every system should provide some short 
cut, as above outlined. It is under these conditions that the 
manager proves his worth. In fact, he is not really capable 
of filling his position unless he knows how to make short 
cuts at the proper time, and just when he should modify his 
standard system, whatever it may be, to take care of unex- 
pected events. 



CHAPTER XVIII 

RECORD OF FINISHED AND UNFINISHED 
GOODS 

After providing for keeping track of the labor force and 
of the raw materials, there still remain the partly finished 
goods, the finished goods, and the machinery, including 
equipment. It is necessary to keep track of the partly fin- 
ished goods for several reasons: 

1. To keep the management informed as to the probable 
time when various goods will be ready for delivery. 

2. To keep track of the approximate value of the goods 
at any time. 

3. To determine whether departments are over or under 
equipped with men and machinery. 

4. To enable the management to determine the value of a 
new contract and to localize waste in production. 

First, it is necessary to know the approximate time when 
deliveries can be made, in order that the company may be 
able to satisfy customers as to its ability to deliver goods. 

Second, it is highly desirable to know the value of any 
goods up to their particular state of completion, because it 
enables the management to determine what are the most ex- 
pensive steps in the process, and makes it possible to de- 
termine in case of fire what his losses have been in partly 
finished goods. 

Third, it is well to know which are the undermanned and 
equipped and overmanned and equipped departments with 
relation to each other. One cannot be too careful as to the 
way in which money is spent to balance the plant. If a con- 
cern does not know its strong and weak points in production, 

281 



282 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

it is in danger of spending money uselessly or of giving 
appropriations to some well-equipped department for further 
improvements, which it really does not need and cannot use 
because of the condition of the rest of the plant. True econ- 
omy does not consist in buying the latest improvements in 
machinery unless the whole plant is fully capable of utilizing 
the improvement to the best advantage. 

Partly finished products give rise to a complicated prob- 
lem of accounting. Goods bought at a certain price as raw 
material have their value constantly increased by the addi- 
tion of labor, power, and of certain costs in the form of over- 
head expenses, insurance, reserves for depreciation, interest, 
and the like. One day the goods are worth little more than 
the raw material. A week later they may be completed. If 
a particular kind of product is being manufactured, various 
amounts of a large order are worth different values at the 
same time, because the material is going through in lots, so 
that it is not in the same state of completion at any given 
period. 

From the standpoint of the nature of orders sent into 
plants, there are two kinds of manufacturing possible: 

1. For a general stock from which the goods are taken as 
the sales are reported. Examples of this type are furnished 
in the making of hats, shoes, textiles, furniture, pianos, and 
almost all ordinary goods consumed in a community. 

2. For a specific contract, as illustrated in the produc- 
tion of locomotives, large machinery, steamboats, and in 
building operations. 

If it be desired to keep close watch on all the goods in 
the partly finished state with their degrees of completion, 
there must be a perpetual inventory or record of unfinished 
work. To accomplish this, it is necessary to carry into effect 
two ideas that have been found imperative elsewhere for the 
attainment of successful management: 

1. Divide the plant into departments. 



RECORD OF FINISHED AND UNFINISHED GOODS 283 

2. Use the production order and have each finished oper- 
ation reported by departments to the accounting division. 

The departmental method of running an organization 
is to divide the establishment into a number of sections. 
Each division is under a foreman, who is held responsible 
for a certain number of steps in the process of manufacture. 

The production order is an instrument, or a series of in- 
struments (see Figs. 35 and 36), made out by the central 
authority, presenting in written form the instructions to be 
followed in various departments of a plant in order to pro- 
duce a given commodity. It may or may not be a part of a 
voucher or budget system. The production order, in its 
strictest sen-se, only tells what things shall be done ; it does 
not necessarily keep track of material used. However, wher- 
ever a production order plan is used, it almost always com- 
bines with it some kind of a material record, and whenever 
the budget system is put into operation, it invariably uses 
some form of the production order. This instrument follows 
the goods through all the departments in the manufacturing 
process; and as they pass from one to the other, the order 
can be made the basis for keeping record of the work as it 
progresses through the plant. To do this, one need only re- 
quire each manufacturing division to notify the accounting 
office of the number of production orders received and the 
amount of work expended on each order during the day. 
This can be done in connection with the material budget and 
time-check system, and in fact is usually a part of the time- 
record scheme.^ In this way the officials of the concern 
have a constant exact record of the value of goods in the 
process of manufacture. 

The simplest type of plant is one which manufactures a 
product like sugar or refined oil. The product comes into 
the plant in a bulk that can easily be measured, and is 

1 gee Chapter XVI, 



284 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

passed from one department to the other, either by pumps 
or gravity. The quantities can be definitely measured, al- 
most if not quite automatically, at the end of each step in the 
process by simple registering devices on the tanks, convey- 
ing tubes, or receptacles. Nothing need be handled. The 
only attention required is to see that the machinery is in 



Workman 


Nn. 


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COSTS* 




CHAR. PURIFIERS 


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Gals. 


Spec, 
Grav. 


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GqIs. 


Speci'fic 
Gravi+y 


Labor 


Gross 


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Uoprod. 






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SUGAR RECEIVED 


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Gravi+y 


Gals. 


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* For Cosf Clerk only 















Fig. 49. — Record SHp showing Amount of Goods which passed 
through a Department in Bulk. 

condition. Of course, there may be wastes in the chemistry 
of the process ; but, if these are once revealed by the scientist, 
the measuring gauges can be made to show their importance. 
In such a plant, the task resolves itself into making a 
permanent record of the product of each department, as 
shown by the weighing of the solids and the readings of the 
registers on the tanks, stills, boilers, and other holders of 
the liquids, and the length of time each amount took to pass 



RECORD OF FINISHED AND UNFINISHED GOODS 285 

through every particular step in the process. If these slips 
(see Fig. 49) for each day's work are sent to the cost clerk, 
he can add the direct labor cost on each portion of the prod- 
uct; and can apportion the percentage that the said depart- 
ment carries of the managerial expenses^rent, taxes, interest, 
depreciation, repairs, and the like, and thus determine unit 
costs. Each department can be required to fill out forms 
like Fig. 49, and, at the end of the day, send them to the 
cost clerk, who can enter them on a cost ledger sheet, ruled 
something like Fig. 50. 

In a plant of this character, where nothing is sold except 
from general stock, it is desirable to know what has been the 
amount of waste in different mixtures, as well as their stage 
of completion within the plant. The former can be deter- 
mined very readily by making note of the total amount of 
the various ingredients of the mixture, and noting at the end 
of the process the total amount of the different kinds of fin- 
ished products obtained from this mixture. If accurate 
ledger record is kept of the material as it passes from one 
step of the process to the other, one can tell, by merely look- 
ing on this summary page, the amount that has been received, 
the amount that has passed through, and the balance on 
hand. One can also tell the extent of the loss that has been 
entailed in purifying the product to any particular degree. 
If, at any time, a new order should come in for a lot of ma- 
terial, or if a cargo of new raw material should be delivered, 
the manager of the plant can turn to the ledger sheets and 
ascertain just what is the condition of the orders under way, 
and how soon he can utilize the raw material awaiting his 
disposal, or how soon he can deliver any unusual orders. 
The ledger can also tell him whether or not one department 
is smaller in capacity than it should be to bring about the 
best results for the firm. In fact, the ledger, if well kept, 
affords just as accurate an inventory of goods in process of 
manufacture as of the raw materials. 



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RECORD OF FINISHED AND UNFINISHED GOODS 287 

In the manufacture of hats, shoes, furniture, and similar 
materials, there is a more difficult x^roblem. The product 
cannot be measured in bulk, and the time taken to manufac- 
ture cannot be recorded for each lot in a group way. The 
commodities are made up of pieces which must be handled 
as units, and the steps in fabrication are such that each 
product must be acted upon separately by the attendant at 
each machine. 

A good way to keep account of products of this type is to 
pass them through the factory in small quantities. Hat fac- 
tories, shoe establishments, and textile mills divide their 
products into lots which may include pieces of so many 
yards, or comprise one, two, three, or more dozens units or 
pairs. A production order is written out for each lot of 
goods, and two methods may be used to record the exact 
condition of the lot in the process. 

1. The production order may be arranged in the form 
of a tag having detachable slips. (See Fig. 85.) As each 
operator finishes his step in the process, he detaches his por- 
tion of the tag, and sends it to the accounting department, 
where all tags are summarized on a partly finished goods 
record sheet for goods which pass through departments in 
lots. (See Fig. 51.) To determine what is in each depart- 
ment by Fig. 51, one need only note the number of lots 
which have been received, but which have not been passed 
on to another machine or step. If one of the departments 
has received a great number of lots and doe3 not seem to be 
delivering them as rapidly as they are turned in to them, the 
management can at once search out the reasons, which may 
be lack of men, insufficient machinery, or may need more 
ability on the part of the foreman to get the work out. 

2. According to the other scheme, a tag or slip is made 
out for each operation (see Fig. 86) , and every day the fore- 
man of each division makes a list of the jobs he finishes and 
then gives this record to the accounting department. In the 

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RECORD OF FINISHED AND UNFINISHED GOODS 289 

accounting department these totals may be summarized on a 
sheet like Fig. 52. This sheet gives the head of the plant a 
good idea of what is going on. Some firms use this balance 
scheme to very good purpose. A certain large wagon manu- 
facturer calls together all of his foremen every day, and has 
them list on a big blackboard their receipts from and deliv- 
eries to every other department, with their balances on hand. 
If any foreman is short of goods or runs below his standard 
amount of receipts, he records his deficiencies in red chalk. 
If his receipts and balances of goods are unusually large, he 
records them in blue chalk. The result is that each foreman 
knows what every one else is doing; and the manager of the 
plant having all the foremen together, can discuss with them 
why they are deficient. If anyone is to blame, the difficulty 
can be located at once, and remedied with remarkable lack 
of friction. This latter scheme of handling material can be 
used very effectively in assembling processes. 

This chapter has advocated the use of the production 
order form of tag or slip, to gather the time of each contract 
on the summary books. (See Figs. 85 and 36.) While this 
is in most cases the best scheme to employ in machine shops 
and similar plants, these ledgers can be used in connection 
with other kinds of time-slips like those illustrated in Figs. 
81, 83, and 34, or even with the daily contract time-book 
(Fig. 29). 

The work of gathering the material on the ledger sheet is 
practically the same in each case. A ledger sheet of this 
character shows the length of time the work has been in each 
stage of the process, and gives the management some idea 
when it should be finished. 

The general question of cost accounting is not under dis- 
cussion here, but if records are kept in the manner indicated 
by the chapters on keeping track of the labor and keeping 
track of the raw material, it requires little or no added ex- 
pense to fill in the column shown on these ledger sheets for 







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RECORD OF FINISHED AND UNFINISHED GOODS 291 

determining exact labor and material costs. Indirect ex- 
penses and power costs will have to be apportioned from the 
general books to the plant's output. 

To keep track of the finished product, little need be done. 
In ordinary enterprises the shipping department receives all 
its finished goods from its own factory. Some businesses 
are of such a nature that the product is shipped as soon as it 
is completed; but where stock is kept on hand, the keeping 
of an inventory is quite as important. The following for- 
mula suggests an efiicient method of keeping such an inven- 
tory: 

[Amounts received from factory (both quantity and 
value) + Balance already on hand (quantity and value) + 
Returns (quantity and value) ] — [Sales (quantity and value) 
+ Amounts given out, but not sales, as gifts, etc. (quantity 
and value)] = Inventory on hand (quantity and value) or 
(A + B + R)— (S + G ) = I. (See Fig. 58. ) 

To make any inventory thoroughly reliable, an adequate 
system of original records should be provided in addition to 
a proper summary record in the ledger. A very good plan is 
to have the shipping department give a receipt for every con- 
signment of goods received from the factory. The receipt 
should be made out in triplicate, one copy being retained by 
the foreman of the factory, one by the shipping department, 
and the third sent to the accounting department, to be used 
as a basis for the ledger entries, and to be filed away for 
reference. 

When the shipping department receives goods returned 
from dissatisfied customers, or from any other source than 
the factory, another form of receipt should be made out in 
triplicate, one to be sent to the customer or source from which 
return comes, one to be retained by the shipping department, 
and one to be sent to the accounting department. 

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RECORD OF FINISHED AND UNFINISHED GOODS 293 

ders should be made out in triplicate, the original to be re- 
tained in the sales department, duplicate and triplicate sent 
to the shipping clerk. The shipping clerk will fill out the 
order so far as possible, checking off all the items he has 
been able to deliver. He will file the duplicate for his own 
reference, taking care to notify the sales department of any 
inability to fill out all the requirements of any order, and 
will send the corrected triplicate to the accounting depart- 
ment, where it will be used as an original record for the 
ledger credits. 

Ledgers of this character can be used for every kind of 
work. They give the management an accurate statement of 
the various kinds of finished product on hand at any time, 
and are an aid in determining future policies in manufac- 
ture. If goods are not being sold rapidly, the reasons can be 
investigated to ascertain whether slow sales are due to laxity 
on the part of the sales department, or to inferiority in man- 
ufacture. Ordinarily, a large percentage of returns indicates 
the latter cause, and a careful investigation will reveal the 
true cause of the plant's deficiency. 



CHAPTER XIX 

RECORD OF EQUIPMENT 

The equipment of a plant may be separated into four 
divisions : 

1. Hand tools and machine attachments used by the 
workmen in the course of their work throughout the day. 

2. Patterns, templets, and other forms used for special 
classes of work or for special occasions. 

8. Drawings, records, and plans. 

4. The power machinery which makes goods under the 
direction of the workmen. 

In keeping track of each of these four classes of material, 
a different principle is involved. The tools of the first class 
are used constantly, and to keep track of them, they must be 
put in a place convenient for the workmen. The tools should 
be so arranged in the tool-room that anyone can find them at 
once, even if he is a comparative stranger to the room, and 
the system of accounting for stock must enable the store- 
keeper at any time to tell who has a tool out. 

As has already been stated, the best situation for the tool- 
room is near the center of the shop. If, however, there is 
any great difference in the rate of wages paid to the men, it 
will be cheaper to place the tool-room nearer to the machines 
at the section of the shop where the most skilful and expen- 
sive labor is situated. Frequently, however, the highly paid 
workers have one or more helpers, so our rule will again have 
to be modified. It is the workmen who have no helpers, and 
yet are highly paid that should be nearest the tool-room. 

1. To keep track of the tools within a tool-room in such 
a way that anyone can find them is not so difficult a task as 

294 



RECORD OF EQUIPMENT 295 

it might seem. In a plant like a textile establishment which 
has really little if any need for hand tools, the tool-room is 
small and unimportant, and almost any system suffices that 
makes it possible to know who have possession of the tools ; 
but in a machine shop where there are a great many small 
tools and attachments for machines, hammers, chisels, drills, 
wrenches, taps, dies, gauges, and a hundred other different 
kinds of instruments constantly in greater or less demand, a 
convenient system must not depend upon the memory of any 
one or of several individuals. 

Two systems are in general use to keep track of materials 
in machine shops: 

(a) The tools may be arranged in classes and groups. By 
this scheme, all cutting tools are kept together in the cutting 
class, the machine cutters being put in a group by them- 
selves, while the hand-cutting tools are grouped separately. 
Within these groups the tools are arranged according to their 
use. If they bore holes, they go under boring cutters; if 
they cut grooves or flat surfaces, they are plane-cutters. 
They a,re also arranged in order of sizes. One firm carries 
out this scheme to a very elaborate extent. 

The tools in the tool-room should be kept in good condi- 
tion by the tool-shop. The workmen should be relieved of 
the necessity of grinding or caring for them. There should 
always be a large supply of the more commonly used tools, 
and at no time should a workman fail to obtain a tool when 
wanted. There should be no red tape necessary to get a tool. 
The workman should be held responsible for a tool after he 
has received it, but should not be put to any unnecessary 
trouble to get it. 

According to the plan outlined, accuracy in record and 
availability for use can be achieved by stamping on the tools 
their proper letters, so that one, even a stranger, need only 
look for the drawer or compartment bearing the same letters, 
in order to put them away in their proper place. 



296 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

(b) The other scheme is to classify tools by numbers in- 
stead of by letters or any mnemonic sign. According to this 
plan, every tool is indexed, and a person desiring a particu- 
lar one, turns to the index, finds its number, and goes to the 
corresponding case or drawer. There is little difference in 
the principles of the two schemes. Both permit the tools 
most generally used to be stored in convenient places, and 
they also keep all tools of the same class together. 

Quite as important as being able to find the tools in the 
tool-room is the ability to tell where the tool is in the shop. 
Many tools are used intermittently, and numerous duplicates 
are unnecessary. Large wrenches are required on big jobs, 
but even the largest shops do not need to have many dupli- 
cates, provided the tool-room clerk is able to tell where a tool 
is at any time. A good device is to give the workman a set 
of brass checks stamped with his number, so that the tool 
clerk may put a check in place of the tool which the work- 
man has secured. This check acts as a receipt for the tool, 
and is not to be returned to the workman unless he delivers 
the tool to the clerk. If a workman calls for a tool not on 
hand, the tool clerk can promptly tell who in the shop has 
it. The workman may then borrow the tool, or leave his 
check with the toolkeeper, get the other man's check and 
exchange it for the tool. The second workman might also go 
directly to the first man and exchange a check for the tool. 
The next time the first workman goes to the tool-room he can 
exchange this check for his own. 

By this simple scheme shops can keep track of all tools 
while out of the tool-room. With the check system, work- 
men can be made to deliver all borrowed tools before they 
permanently leave the plant, because they can be compelled 
to return a full complement of checks before they will be 
given a clearance paper from the tool-room. 

The system indicates who has any particular tool out at 
any time, but it does not show how many tools any particular 



RECORD OF EQUIPMENT 297 

workman has. If it is desirable to keep track of this, the 
tool clerk can have a list of the workmen's numbers, and 
enter therein the numbers of the tools each workman takes 
out. There are so few advantages, however, in having this 
information that it is seldom, if ever, recorded. In some 
cases expensive or special tools, as a diamond-cutter, may 
require a special receipt from the workman, but otherwise 
the tool-room clerk can keep sufficiently close watch on the 
tools a man has out by keeping record of the checks a work- 
man has lost, and by noting his calls for any tools which 
would be unusual for his particular work in the shop. If 
the man is about to leave and has lost checks, the clerk need 
merely refer to his memorandum, and insist that all other 
checks be accounted for by tools. This may seem a free and 
easy method for one to keep track of thousands of tools and 
hundreds of workmen; but, as a matter of fact, the fine that 
is attached to the loss of checks makes it unprofitable for a 
man to take tools which are not extremely valuable in their 
nature, and in those cases the special receipt is ample pro- 
tection. 

Besides keeping the tools convenient to the men and 
keeping track of them in the tool-room and in the shop, the 
tool department should be able to report to the management 
the kinds and makes of the most serviceable and profitable 
tools. A convenient and reliable scheme is to have stamped 
on the shank of the tool, or in some inconspicuous part, the 
date of its purchase and the cost mark; and, if it is not 
already there, the name of the firm which made it. If this 
plan is followed and care is taken to issue the tools under 
comparison, an equal number of times, the management can 
soon tell which makes are proving the most efficient and 
economical. It can also determine from this record what is 
still more important : the actual expenses connected with the 
tool department and what classes of work are the most ex- 
pensive users of tools. 



298 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

2. The second class of equipment — patterns, jigs, tem- 
plets, and other forms and guides for the workmen — -are not 
important in many lines of manufacturing. In many others, 
however, they are used almost continuously. In some classes 
of production the forms or patterns must be renewed every 
year or so, not because they are worn out, nor because the 
firm ceases to manufacture goods of a similar grade, but 
simply because the whim of fashion has called for something 
else a little different in shape or form. In the shoe industry 
the question of lasts is troublesome. Some factories sell 
their lasts to concerns that manufacture a cheaper or lower 
grade of shoe, and hence do not cater to the more fastidious 
public. Even when lasts are sold, they are sold at a loss to 
the concern. Eventually every shoe manufacturer must sacri- 
fice a great deal of money yearly through the discontinuance 
of certain styles and the introduction of others. Great as 
this loss is in total amount, it does not put a heavy burden 
on any one pair of shoes, because a concern manufactures 
thousands of pairs in a year, and the money expended upon 
the lasts is distributed through so many pairs of shoes, that 
it adds but little to the cost price of the shoe. 

Other industries find patterns and forms just as essential 
as does the shoe industry. An engine cannot be built with- 
out using many expensive patterns and forms of various 
kinds, and general machine shops rapidly accumulate a 
large number of patterns. The drawing-room receives the 
specifications for all contracts, and it can make possible 
heavy savings in using old forms and patterns if they hap- 
pen to know of previous jobs whose patterns can be adapted 
to the new undertaking. 

It is important for the drawing-room to know just what 
patterns it has at any particular time. Few engines made 
at different times are exactly alike, yet every new engine 
must have a complete set of patterns, which will in all prob- 
ability never be duplicated. The patterns may represent 



RECORD OF EQUIPMENT 299 

several thousands of dollars in labor and materials, and be 
useful for only one contract. It is not to be assumed that 
these patterns represent a dead loss, for, although they may 
never be used again as they stand, they can frequently be 
utilized for other orders by making alterations. Because 
they may be adapted to other work, manufacturing firms al- 
ways keep patterns, whether the work is likely to be dupli- 
cated or not. If a plant has been in operation for some time, 
these patterns may accumulate to embarrassing proportions, 
and unless there is some system of registration for them and 
the drawings which they represent, duplications and partial 
duplications of these forms will constantly occur and occasion 
large losses. Companies early began to develop plans for 
cataloguing drawings and patterns. 

8. One scheme was to classify the drawings by the num- 
ber of the contract, and to list the name of each by the part 
of the engine it represented. Thus, a drawing of a high- 
pressure cylinder of the 121st contract would be entitled 
"high-pressure cylinder," and in some less prominent place 
on the sheet would be printed "Contract No. 121." The 
patterns would be numbered in a corresponding manner. 
The system is faulty, because the contract number gives no 
intimation as to the kind of job represented. Should it 
happen that the shop turns out water turbines, steam pumps, 
hoisting engines, blowing engines, and marine engines. Con- 
tract No. 121 might be anyone; and since patterns and draw- 
ings were filed and stored in order of the number, the disad- 
vantages were many, but the system had in it suggestions 
for a better one. 

Few, if any, contracts go through a drawing-room with- 
out the chief engineer and the draftsmen knowing for whom 
they are intended. Involuntarily the number of the contract 
becomes associated with the purchasing firm; and the said 
firm is, in nine cases out of ten, engaged in a particular busi- 
ness. If the company orders a blowing engine, it is in the 



300 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

iron business, and not likely to call for marine engines. 
The contract numbers become attached to the firm's work, 
and the firms become associated with certain classes of ma- 
chinery. To the men in the drawing-room, a new order for a 
blowing engine calls to mind the firms which have ordered 
similar engines in the past, and they recall the contract 
numbers which have been attached to those firms. This co- 
incidence gave rise to another system of tabulating drawings 
and patterns, viz. : 

To classify alphabetically according to the names of the 
firms who order. This system is superior to the previous 
one in that it simplifies the search for drawings of machinery 
of a similar type, and reduces the probability of drawings 
being overlooked. To the older men in the office a firm's 
name suggests the kind of machinery it is in the habit of 
securing, and they involuntarily start to hunt them up when 
machinery of that type is reordered. Although in a mod- 
erate-sized plant the system is quite satisfactory, in a very 
large one it fails because new men are constantly coming in 
who do not know all the ordering firms, nor remember their 
characteristics. Besides, ordering firms at times radically 
change their work and call for other things, so that impor- 
tant drawings may be forgotten, especially if there has been 
any change in the administration of the engine-building 
company. The system tends to fail because men are com- 
pelled to remember too many names, and too much about 
past orders. 

An effective system is to classify the machinery into 
groups, and give each group a distinctive number. Engines 
of the reciprocating marine type might all come under 500, 
if simple engines their number will be 510, if compound 520, 
triple expansion 580, and so on. Should the steam expan- 
sion of the simple engine occur in two cylinders, its number 
would be 512; by letting the units re]3resent the number of 
cylinders, a triple expansion engine with five cylinders would 



RECORD OF EQUIPMENT 801 

be 585. The arrangement of the cylinders over each other 
determines the number of connecting-rods, piston-rods, 
cranks, housings, and the like, which the engine will require. 
Frequently a five-cylinder engine will have four of the cylin- 
ders arranged in pairs tandem, while the fifth will be single. 
An engine of that character will have three connecting-rods, 
three cranks, three sets of housings or their equivalent, three 
sets of eccentric rods ; in brief, the engine will be built on a 
triple basis throughout. These kinds of arrangements could 
readily be indicated by the addition of decimals. Thus, if a 
quadruple expansion marine engine had six cylinders ar- 
ranged — two tandem, two single, two tandem — it could be 
expressed 546.2112. Should there be any other characteris- 
tics that were desired to be shown, it could be done by the 
insertion of letters, or some other simple device. Thus, 
suppose the above quadruple expansion engine had surface 
condensers, they could be indicated by a letter "S" substi- 
tuted for the decimal, thus 546S2112. A jet condenser would 
be shown by the substitution of a letter "J" instead of the 
letter "S." 

A system of classification based upon this general outline 
possesses the advantage of giving easy accessibility to all 
kinds of machinery of any class made at any time. In ad- 
dition to its application in the drawing-room, it can be used 
in the pattern storage houses. 

A convenient scheme for the arrangement of the patterns 
is to apply the drawing-room classification to the placement 
of the patterns in the storage shed. The drawings above 
have been numbered according to a certain grouping system, 
which gives characteristic numbers to each class of engines 
or machinery manufactured, so that one can tell at once by 
the number what an engine is like, and much about it. If 
we divide up the pattern storage room on a basis of that 
classification, all the patterns for the engines and engine 
parts would be readily accessible. All engines, although they 



802 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

may differ widely in their design, structure, and size, have 
certain parts which are in the main common, as cylinders, 
steam chests, engine frames, bed plates, shafts, fly-wheels. 
The patterns may be grouped either by contracts as a whole, 
or by like parts of different contracts. 

The first scheme has the disadvantage that patterns of 
small and large parts and of dissimilar pieces are likely to 



symbol 


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Fig. 54.— Pattern Record Card. (Front.) 



be piled together at the expense of good order and of storage 
space. If all the similar parts of the various machines are 
grouped together, it is easier to find the same kinds of 
pieces ; and if the system of arrangement is made to corre- 
spond to the drawing numbers, the particular patterns can 
easily be located. 

In addition to having the patterns accessible, it is highly 
desirable that the drawing-room should know the exact con- 



RECORD OF EQUIPMENT 303 

dition of each pattern, and where it is at any time. This 
can be accomplished by having filed in the drawing-room 
cards which give the number and complete history of each 
pattern, showing all alterations. Copies of the card may be 
kept on file in the ofhce of the pattern storage rooms. When 
the pattern is taken from storage, its card may be removed 
from the usual filing drawer to another one, so that all the 
patterns in the storage shed may be in one compartment, 
while those in the foundry or pattern shop may be in another. 
(See Fig. 54.) 

If, in addition to the scheme of segregating the pattern 
cards, to show those out of storage the plan to be adopted of 
requiring everyone who secures a pattern to leave a receipt 
countersigned by the foreman of the department to which it 
goes, and of filing that receipt with the pattern card, it be- 
comes a very simple matter, indeed, to trace the pattern at 
any time. If any alterations have been made on the pattern, 
the nature of these changes may be entered on the back of 
the card, so that one will have a complete record of the pat- 
tern from the time it was first constructed until it is de- 
stroyed. 

The principles outlined for keeping track of patterns may 
be carried out for keeping track of any other kind of ma- 
terial. Some concerns have adopted a filing scheme based on 
the Dewey Decimal system for their technical literature. 
The Engineering Experiment Station of the University of 
Illinois has published several pamphlets showing how the 
Dewey Decimal System of classification may be applied to 
Engineering and Architectural work. ^ 

According to the Dewey system, all knowledge is sepa- 



'^ Bulletins, Nos. 9 and 13, University of Illinois Engineering 
Experiment Station, "An Extension of the Dewey Decimal System 
of Classification Applied to Engineering Industries," and "An 
Extension of the Dewey Decimal System of Classification Applied 
to Architecture and Building." 
31 



304 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 



rated into ten classes, and each class is given one of the 
hundreds for a number, viz. : 

000, General, including Astrology, Palmistry, and Works of a 
similar character. 
100, Philosophy. 
200, Religion. 

300, Sociology and Economics, the Social Sciences. 
400, Philology. 
500, Natural Science. 
600, Useful Arts. 
700, Fine Arts. 
800, Literature. 
900, History. 

Each of these classes is broken into nine divisions with a 
tenth division for general matter in the class, and each divi- 
sion is in turn separated into nine sections. The sections 
are again subdivided, and the process may be carried on 
indefinitely. 

"To show clearly the working of the system the divisions of 
Class 6 (useful arts) and the sections of Division 2 of this class 
(engineering) are given. 



600, 


Useful Arts. i 


620, 


Engineering. 


610, 


Medicine. 


621, 


Mechanical. 


620, 


Engineering. 


622, 


Mining. 


630, 


Agriculture. 


623, 


Military. 


640, 


Domestic Economy. 


624, 


Bridge and Roof. 


650, 


Communication and 


625, 


Road and Railroad. 




Commerce. 


626, 


Canal. 


660, 


Chemical Technology. 


627, 


River and Harbor. 


670, 


Manufactures. 


628, 


Sanitary : Water Works 


680, 


Mechanic Trades. 


629, 


Other Branches. 


690, 


Building. 







"It will be seen that the first digit gives the class ; the second, 
the division ; and the third, the section. Thus 625 indicates Sec- 
tion 5 (railroad engineering) of Division 2 (engineering) of Class 6 
(useful arts). For convenience a decimal point is inserted after 
the section digit. Further subdivision is indicated by digits fol- 
lowing the decimal point. For example, 625.2 is the number indi- 



RECORD OF EQUIPMENT 805 

eating rolling stock; 625.23 passenger cars; 625.24 freight cars, 
etc. 

*'Uses and Advantages of the Classification and Index. — The 
decimal classification may be used to advantage in the indexing 
and filing of notes and memoranda, clippings, general information, 
articles in technical journals, drawings, catalogues, or books. For 
this purpose the decimal system possesses certain important ad- 
vantages over the alphabetical system. 

"(1) It groups allied subjects. For example, suppose the alpha- 
betical arrangement to be applied to a case of catalogues. The 
catalogues of the various machine tools, as planers, lathes, drills, 
hammers, etc., would be scattered throughout the case. With the 
decimal system, on the other hand, all these catalogues would be 
grouped together under the class number 621.9. 

"(2) Unless an elaborate system of cross reference is used, the 
alphabetical scheme is ambiguous ; in many cases there is doubt as 
to what letter should be given a subject. For example, take the 
item "Automatic pneumatic block signals." This might almost 
equally well be indexed under A, F, B or S. With the decimal 
system this item has its one number 656.256.4. 

**(3) The decimal system has the advantage of flexibility and 
an indefinite capacity for extension. For the indexing of books 
and catalogues only the main division and sections will, in general, 
be found necessary ; but for card indexes of technical literature 
the most minute subdivisions must ordinarily be used. In indi- 
vidual cases, the user may find that still further division is re- 
quired. An extension may then be made by adding another decimal 
place, and if still further subdivision is required still another digit 
may be used. 

"The average engineer, for example, can easily index all matter 
relating to traveling cranes under the single class number 621.872. 
The designer or builder of cranes may, however, have so much 
matter relating to this special subject that further subdivision is 
needed. By the addition of a digit, this matter may be divided 
into nine groups, designated by 621.872.1, 621.872.2, etc, ; and, if 
necessary, each of these maybe divided into nine new groups, "^ 

While this system works well for the filing of books, clip- 
pings, and drawings, it has its limitations when used to ar- 

^ Bulletin, No. 9, University of Illinois, Engineering Experi- 
ment Station, pp, 2 to 4. 



306 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

range contracts and patterns. Manufacturing firms, as a 
rule, have specialized their work to such an extent that it is 
unnecessary for them to have any general class number like 
621, to let them know their contract deals with mechanical 
or electrical engineering machinery. For locating patterns, 
such numbers are not only unnecessary in the average shop, 
but are confusing; hence, while the Dewey system of classi- 
fication is excellent for filing all information which the firm 
may gather from outside sources, a simple modification like 
the one above suggested, may be used to advantage in cata- 
loguing patterns and contracts. 

4. In order to keep a sufficient record of machines, the 
management should know the following: 

(a) Are the machines running to their full capacity all 
the time the workmen are attending to them? 

(b) Are there sufficient machines to do the class of work 
required by the shop? 

(c) What is the up-keep cost of the machines in repairs, 
lost time, etc., and the reasons for these expenses? 

(d) What is the rated and real capacity of the machines? 
When a company purchases a machine, the salesman is 

quite apt to make extravagant statements concerning the per- 
formance of the device, and the apparatus often proves to be 
far less efficient than one would conclude from the salesman's 
representation. Manufacturers have frequently been inclined 
to discredit salesmen's promises fifty to one hundred per 
cent. In many instances such action is unfair to the sales- 
man and to themselves, because they may not have gotten 
the possibilities from the machine, ""and may blame the sales- 
man for misrepresentation while their own workmen are at 
fault. The lack of output may be due to prejudice against 
the device on the part of the workmen, who, to prevent 
changes in wage rates, will not make the machine produce 
to its utmost. Sometimes they feel that the output from 
previous machines is sufficient, and that the new machine is 



RECORD OF EQUIPMENT 



307 



to be considered a labor-saver, in the sense that it will save 
them from exerting themselves, as formerly, in order to make 
the old standard output. The old way of managing a shop 
compelled the foreman to be alert to prevent machine hands 
from soldiering. If the boss is familiar with all the ma- 




By courtesy of The Bristol Company, Waterhury, Conn. 

Fig. 55. — Record Card of a Bristol Automatic Time Re- 
corder AppHed to Two Paper Machines, Showing All 
Idle Time in Twenty-four Hours. 

chines in operation, he can prevent idleness to a very great 
extent; but it is possible to loaf on machine work, even with 
the best and most knowing overseers. A number of ingeni- 
ous devices have been j)nt on the market to eliminate depen- 
dence upon the foreman's knowledge. These automatic- 
recording devices keep track of the power used per hour, of 
temperatures, and of pressures at all times. In fact, one can 
have almost anything recorded. With them one can tell from 



808 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

the power and time records whether the machine is using up 
all the power demanded by its maximum capacity, and what 
is the extent of its idle time during any period. 

The following figures and illustrations give an idea of the 
application of recording instruments to industrial conditions. 
Fig. 55 shows an application of it to two paper machines. 
Every time either of the machines stopped, the recording pen 
for the machine dropped toward the periphery of the card, 
and the duration of the idleness is shown by the length of 
the notch. Figs. 56 and 57 show the temperature records, 
"the chart No. 661, of December 15, 1908, was drawn 
shortly after the installation of this thermometer on our 
feed- water system. That of April 18, 1909, is from the same 
instrument. A comparison of these two will give you an 
idea of the improvement it is possible to affect in feed-water 
temperature, with the aid of a sensitive, accurate recorder."^ 

One great advantage of all these recording instruments is 
that no matter where the operations are carried on, the re- 
cording apparatus can be concentrated at any point. In this 
way it is possible to have all the records in the office of the 
foreman or superintendents while they are being made. 
Many plants, however, do not have the instruments so placed, 
because if they are going to get the greatest efficiency out of 
their men, it is well to let the workers see just what kind 
of a record they are making while on duty. The foremen 
should be around to see the men from time to time, so there 
is no great advantage gained by having the gauges gathered 
together in his office, or that of some suj)erior official. The 
superintendent of a large plant has other duties than watch- 
ing gauges in operation. His clerk should gather the records 
and call his notice to any bad reports or unusual showings 
which need attention. He will thus know what to investi- 
gate, and should not be troubled with the records when 

^Bulletin, No. Ill, The Bristol Company, September, 1909. 



BIO THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

everything is going as well as present methods make possi- 
ble. His time under those conditions can be better em- 
ployed in improving the methods in operation. 

If the records kept show that machines are always run- 
ning at their full capacity, it is fair to expect them to make 
their promised output. Not only is it necessary to see that 
machines are making their promised outputs, but care should 
be taken to see that they make it consistently throughout 
long lapses of time. Many firms keep daily records of ma- 
chine outputs in such a way that a person can tell at a glance 
how the department is running. These records are frequently 
used in connection with other data. Mr. H. L. Gantt in 
1908 published a paper, entitled "A Graphical Daily Bal- 
ance in Manufacture, ' ' to show how a daily balance scheme 
can be used to facilitate getting work turned out by a de- 
partment. The advantages of his daily balance scheme, as 
he presented it, are that it aids the foreman by showing him 
at a glance what is to be done, and what he has already done 
on any particular lot. In order to show this he presents 
some tables indicating his balance sheet scheme, which are 
here reproduced. (See Fig. 58. ) 

One will observe that this is merely a plan for keeping 
track of unfinished material, not unlike some previously 
described, but the scheme can be used to determine whether 
the plant is over or under supplied with any kind of ma- 
chines. Indeed, Mr. Gantt, in his note at the bottom of the 
right of Fig. 58, calls attention to the fact that it can be so 
used : ' ' This table shows the way Fig. 58 would look if the 
works were short of frame-drilling capacity. ' ' Any one of 
the schemes used to kee]3 track of partly finished goods would 
likewise show any deficiencies in machine equipment, pro- 
vided the foreman could prove it was not due to lack of labor 
or to his own insufiiciency. 

After a firm is satisfied that its machinery is working to 
its full promised capacity, and has demonstrated that it has 



RECORD OF EQUIPMENT 



311 



sufficient machinery on hand to do the work required, the 
next question, and an exceedingly important one, is to de- 
termine which machines are really the most economical to 



H. L. CANTT 
Order No. 77 
1 6 Engines, N. V. C. 



A. L. CO. PRODUCTION SHEET 

Schenectady Works, Machine Shop No. 1 



PART. 



FRAMES. 



RAILS. 



Pur. Ord.; Sketch; 
Pat or Card Dr. No. 



OPERATION 



To Be Begun. 



To Be Finished. 



No. Finished. 



-a^s^a^a^a^a^a ^a^a^a^al 



1903. 








Jan. . 


.. £0 


2 


2 


, 


. . 21 


2 


4 


" 


.. 32 


,. 




" 


■• 23 


I 


S 


" , 


.. 24 


2 


7 


" 


.. 26 


4 


'J 


" , 


.. 27 


I 


12 


" 


.. 28 


2 


14 



6 6 
6 12 



3 3 
» 4 



6 6 ..• 
4 10 . . 
2 12 4 



6 18 4 t6 



Feb. 



^^^ I 10 I 8 
.. .. I II 2 10 
.. .. 3 14 I II 
I 12 



4 22 4 20 2 10 
4 26 4 24 4. 14 



3 4 3 4 

2 6 "i 'e 
7 



1 7 

2 26 4 18 2 9 

2 28 4 22 I 10 I to ... f. 

' 3° 6 aS 3 13 3 J3 2 10 

<• •• 2 30 2 IS '^^ ^ 4 14 

•• 4 18 

•• .. 6 24 



4 28 



.... 16' 

17 

18 

.... i<> 

.... 20 
.... 2t 

23 

24 

.... 2S 

.... i6 



This side shows a record as' actually kept 



This 
works 



side shows how the table would look if the 
were short of frame drilling capacity. 



Fig. 58.— Records Showing: Output of Machines. Adapted from 
a Paper Given by H. L. Gantt, "A Graphical Daily Balance 
in Manufacture," Transactions American Society Mechanical 
Engineers, vol. xxiv, pp. 1322-36, Figs. 290, 291. 

have. A large textile establishment once introduced a num- 
ber of costly looms which were guaranteed to turn out a cer- 
tain quantity of cloth within a given i^eriod. In testing the 
looms it was found that they made the output with little 



312 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

apparent effort, but when it came to examining the output 
records of the departments, it was found that the looms were 
not nearly so efficient as they were expected to be. It was 
found on investigation that the loss in output was due to lost 
time taken in repairing and looking after the machinery. 
The manager then kept a record of the amount of repairs and 
of lost time on the looms, and found to his amazement that 
they were not nearly so efficient as the ones that had been 
discarded. Upon further investigation he found that the 
operators were unfamiliar with the electrical starting devices, 
and through their ignorance were causing the firm a loss of 
hundreds of dollars. Many concerns keep records of this 
type for every machine in their plant, and they find the 
records are helpful in determining what machines are best 
suited to their purposes, as well as being useful in determi- 
ning the repair and depreciation charges. (See Fig. 59.) 

Within recent years, some important textile concerns 
have adopted an effective inventory scheme. A plan is made 
of every department of the establishment, and on it is indi- 
cated every machine or piece of equipment within the sec- 
tion of the plant represented. All pieces in the department 
are numbered, no matter how small, and are shown in the 
drawing. (See Fig. 60.) In addition a separate record is 
kept containing an accurate description of the machines, and 
also information relating to their prices, dates of purchases, 
rates of depreciation, from whom purchased, by what power 
driven, when and how disposed of, and the amount realized 
on their disposal. (See Fig. 59.) 

The drawings alone present considerable information. 
They show the dimensions of the plant or department, and 
indicate the exact position of every piece of equipment, while 
on the same sheet with the drawing is tabulated a brief de- 
scription of the machines, the number of each, the niethods 
of driving them, and a description of the motive power. A 
more detailed statement of these items is entered on type- 



















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814 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

written sheets, which give full descriptions of the inventory. 
Whenever a change is made in the equipment, the drawing 
is altered, the table is corrected to correspond with the 
change, and the descriptive part of the record is corrected 
in order to give accurate indication of the new conditions 
within the plant. 

Accuracy and fairness in keeping these inventory records 
are essential. Insurance companies prefer, at times may 
even insist, that they be kept by disinterested appraising 
firms in order to guarantee absolute trustworthiness. It is 
not, however, an imperative necessity for an outsider to keep 
such records ; because fallacies may be detected from internal 
evidence. Save in unusual cases, machinery is acquired by 
purchase, a bill of sale is always given with such transac- 
tions, and the machine-manufacturing companies keep their 
sales records. In case of any dispute the insurance com- 
panies can refer to these records; and thus, by making 
proper depreciation allowances, obtain a close approximation 
of the value of the machinery from an independent source. 

This inventory record possesses a number of advantages. 
Aside from its importance in case of fire, it keeps the firm 
thoroughly informed as to the exact status of all its jDOsses- 
sions within the plant. The true value of the equipment, 
both in total and in individual items, is never obscured. 
Even if the records are not accurately kept they serve as a 
convenient basis for tracing out the original value. It fre- 
quently happens that the assured will, unless he possesses 
such a record, be unable after a fire to tell just what his 
losses are. Many times he overlooks important items in his 
loss statements to the insurance companies, and does not 
recover amounts to which he is justly entitled. Insurance 
companies feel quite justified in paring down claims when- 
ever their validity is in any doubt, and there are often pos- 
sibilities for disagreement where no such record is kept. 
Seldom, indeed, after large conflagrations, are adjustments 



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316 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 

made without friction, and always at the expenditure of con- 
siderable sums of money. These sums far exceed the cost of 
installing a proper fire inventory system, while the after- 
expenditures are never satisfactory. 

If fire never occurs in the plant, the additional work re- 
quired to keep this type of inventory is so srnall compared 
with the advantages gained by having a chart of the equip- 
ment constantly in view that it is well worth the trouble to 
have it, if only to help keep the other records, as shown in 
Fig. 59, which refers to output and repairs on machines. 
The plat record shows at a glance all the things that the firm 
owns, while the other figure gives the details of each individ- 
ual item. It is an ideal inventory record for machinery. 



